Skip to main content

Spousal Signatures Under Equal Credit Opportunity Act

Aug 06, 2015
Signature Pic/Credit: Fuse

Question: When is a mortgage lender permitted to require a non-borrowing spouse to sign loan documents?

Answer ...
The Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B, prohibits creditors from discriminating against applicants on a number of prohibited bases including marital status. [15 USC § 1691 et seq., 12 CFR § 202]  

Under Regulation B, unless a spouse is a joint applicant, a lender may not require the signature of an applicant’s spouse on any loan document, except any loan document that is reasonably believed to be necessary under applicable state law, if the applicant qualifies for the amount and terms of the credit requested under the mortgage lender’s credit standards. This is the case even if the subject property securing the credit is jointly owned by the applicant’s spouse. [12 CFR § 202.7(d)(1)] 

If the applicant does not qualify under the lender’s credit standards, which may not include a requirement for a spousal guarantee, then the lender may condition approval on the addition of a guarantor or cosigner. However, a lender is not permitted to require that this individual be the applicant’s spouse. [“Common Violations and Hot Topics,” Outlook Live Webinar, July 29, 2015, FRB] 

Generally, this rule applies to all open-end and closed-end, secured and unsecured extensions of consumer credit and business credit. However, there are exceptions.

Taking into account state property laws, a lender may be permitted to require the signature of a non-borrowing spouse on loan documents under three circumstances: 

1. With regard to secured credit transactions, a lender may require a non-borrowing spouse’s signature on any loan document necessary, or which the lender reasonably believes is necessary, to secure the credit under applicable state law and protect the mortgage lender in the event of default. [12 CFR. § 202.7(d)(4)] 

2.  With regard to unsecured credit transactions in community property states, a lender may require a non-borrowing spouse’s signature on any loan document necessary, or which the lender reasonably believes is necessary, to make the community property available under applicable state law to satisfy the debt in the event of default if:

►Applicable state law denies the applicant power to manage or control sufficient community property to qualify for the amount of credit requested; and 
►The applicant does not have sufficient separate property to qualify for the amount of credit requested without regard to community property. [12 CFR § 202.7(d)(3)]

3. Third, with regard to unsecured credit transactions in non-community property states, a lender may require a non-borrowing spouse’s signature on any loan document necessary, or which the lender reasonably believes is necessary, under applicable state law to enable the lender to reach the property relied upon in the event of the applicant’s death or default. [12 CFR § 202.7(d)(2)] 



Michael Barone is executive director, and director of Legal and Regulatory Compliance for Lenders Compliance Group.

About the author
Published
Aug 06, 2015
PACE Yourself

How green dreams for homeowners turn into lenders’ red flags

Rocket Mortgage Sues HUD Over Regulatory, Enforcement Discrepancies

Rocket seeks dismissal of the DOJ's October lawsuit alleging the lender committed racial appraisal bias.

Dec 05, 2024
CFPB Finalizes Rule Increasing Federal Oversight On Nonbank Fintechs

The final rule concerns lenders that offer digital payment apps and handle more than 50 million transactions per year.

Banking Regulator Testifies On Digital Transition, Climate Risks

Head of the OCC shares front-line perspectives as federal agencies prepare for a second Trump administration

Nov 20, 2024
FHA Proposes Looser Boarder Income Requirements For Qualifying Borrowers

The proposed changes reduce acceptable rental income history from two years to 12 months, among other expansions of FHA guidelines

Nov 20, 2024
New Calendar, Or Dictionary, Needed For AnnieMac

Half-a-dozen class-action law firms have launched investigations into AnnieMac's "proactive" handling of a late-August data breach.