In one sentence
The release and distribution of loan funds at closing, per the settlement statement and closing instructions.
The longer version
Disbursement is the moment the loan funds: proceeds flow to payoffs, escrows, fees, and the borrower per the agreed statement. It happens only after funding conditions are confirmed.
Disbursement mechanics, wet or dry, escrowed or direct, are governed by the closing instructions and reconciled on the settlement statement.
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