Joint Applicants – NMP Skip to main content

Joint Applicants

Jonathan Foxx
Aug 26, 2016
In this morning’s housing data news, mortgage applications are on the decline again, yet the historically low mortgage rates are remaining relatively steady

Question: We are a direct lender and have three questions that are somewhat related. Firstly, we know that application signatures by spouses and others are not permitted to be used for extending credit in certain circumstances, yet our training material is not clear about the rule. What is the rule? Secondly, if an applicant uses joint financial information, can we assume the application is for joint credit? And thirdly, exactly who is a joint applicant?

Anmswer
Except as provided in Regulation B, a creditor may not require the signature of an applicant’s spouse or another person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s standard of creditworthiness for the amount and terms of the credit requested. [12 CFR § 202.7(d)(1)]

The basic intent of the signature rule is to ensure that a qualified applicant is able to obtain credit in his or her own name. Therefore, a creditor may not require an applicant who is creditworthy to provide a cosigner, even if the creditor applies the requirement without regard to sex, marital status, or any other prohibited basis. [12 CFR Supplement I to Part 202 – Official Staff Interpretations § 202.7(d)-1]

With respect to an applicant submitting joint financial information in order to obtain an extension of credit, a creditor may not deem the submission of a joint financial statement or other evidence of jointly held assets as an application for joint credit. [12 CFR § 202.7(d)(1)]

Finally, a joint applicant is someone who applies contemporaneously with the applicant for shared or joint credit. It does not refer to someone whose signature is required by the creditor as a condition for granting the credit requested. [12 CFR Supplement I to Part 202 – Official Staff Interpretations § 202.7(d)-2]



Jonathan Foxx is president and managing director of Lenders Compliance Group, Brokers Compliance Group, Servicers Compliance Group and Vendors Compliance Group, national companies devoted to providing regulatory compliance advice and counsel to the mortgage industry. He may be contacted by phone at (516) 442-3456, by e-mail at [email protected] or visit LendersComplianceGroup.com

Published
Aug 26, 2016
CFPB Seeks Insight On Creating A Fairer Mortgage Market

The Consumer Financial Protection Bureau has been actively looking to create a fairer mortgage market, free of discriminatory engagements. To do so, it issued a Request for Information to seek input on rules implementing the Home Mortgage Disclosure Act.

Regulation and Compliance
Nov 17, 2021
Regulators Renew Effort to Protect Against Foreclosures

CFPB, The Fed, FDIC and other agencies will watch for compliance with COVID-19 protections

Regulation and Compliance
Nov 10, 2021
Fed To Begin Tapering Asset Purchases by 14.3% This Month

Also sets target range for the federal funds rate at 0 to 1/4%.

Regulation and Compliance
Nov 03, 2021
CFPB Cracks Down On Discriminatory Credit Reporting For Black And Hispanic Consumers

Consumers in majority Black and Hispanic neighborhoods are far more likely to have disputes appear on their credit reports. 

Regulation and Compliance
Nov 03, 2021
CFPB Names 2 New Assistant Directors

Former Obama Administration officials will lead Supervision Policy, Enforcement divisions.

Regulation and Compliance
Oct 29, 2021
FHFA Proposes Extra Disclosure Rules For Fannie, Freddie

The proposed rule for the Enterprise Regulatory Capital Framework seeks to put Enterprises on a "level playing field" with U.S. banking requirements.

Regulation and Compliance
Oct 28, 2021