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FOS Blog

10 Oct

Say “I Do” to ECOA Compliance – Spousal Consent

Say “I Do” to ECOA Compliance – Spousal Consent

The Equal Credit Opportunity Act (ECOA), Regulation B, prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, military status, or because an applicant receives income from public assistant program or has in good faith exercised any right under the Consumer Credit Protection Act.  Marital status discrimination is one of the most often cited violations of ECOA and the source of many fair lending referrals to the US Department of Justice.

If spouses intend to jointly apply, a creditor should obtain evidence of intent at the time of application. A creditor shouldn’t require the signature of an individual applicant’s spouse (other than a joint applicant) on any credit instrument if the individual applicant qualifies for credit such as:

  • Non-Creditworthy Applicant
    • If the applicant does not qualify for credit, the Bank may require an additional party; however, the creditor may not require that additional party be the applicant’s spouse.
  • Renewed Credit
    • If creditworthiness is re-evaluated when credit is renewed, a creditor must determine whether the additional party is still required, if they aren’t, the creditor must release the additional party.

However, as for all Regulations, there are exceptions in which the creditor may require spousal signature such as:

  • Secured Credit
    • On any instrument, for example the recorded mortgage, reasonably believed to be necessary to ensure access to the property in the event of default.
  • Unsecured Credit
    • On any instrument, for example an Assignment of Deposit Account agreement or an Investment agreement, reasonably believed to be necessary to ensure access to the property in the event of the death or default of the applicant, only if the individual applicant relies on property jointly held with a spouse to qualify for the unsecured credit.
  • Business Credit
    • Personal guarantee of the partners, directors or officers of a business and the shareholders of a closely held corporation, even if the business is creditworthy; therefore, if the applicant’s spouse is a partner, director, officer or shareholder, the creditor can require their personal guarantee.
    • However, creditor may not require guarantees only of the married officers of the business.

The following strategies can be used to mitigate the risk of a spousal signature violation:

  • Ensure your Bank has clear Regulation B policies and procedures for all credit products.
  • Ensure adequate training for loan officers and processors.
  • Obtain adequate written evidence at time of application of the spouse’s intent to jointly apply for credit.
  • Obtain appropriate legal analysis prior to implementing spousal signature requirements.
  • Conduct periodic reviews or audits for compliance with Regulation B.

For additional information, contact the author Natalie Yerger at