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When making a mortgage loan, is there any way we can ask that the borrower’s spouse be a co-borrower when the other spouse qualifies for the loan alone? – IBA Compliance Connection

IBA Compliance Connection

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When making a mortgage loan, is there any way we can ask that the borrower’s spouse be a co-borrower when the other spouse qualifies for the loan alone?

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No, the Equal Credit Opportunity Act (ECOA) and Regulation B prohibit you from requiring a borrower’s spouse to serve as co-borrower, unless the spouses jointly applied for the credit. You may not “require the signature of an applicant’s spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s standards of creditworthiness” for the loan. If necessary, you may request an additional party, such as a “cosigner, guarantor, endorser, or similar party,” but you cannot require that the additional party be the borrower’s spouse.

For resources related to our guidance, please see:

  • Regulation B, 12 CFR 1002.7(d)(1) (“Except as provided in this paragraph, a creditor shall not require the signature of an applicant’s spouse or other person, other than a joint applicant, on any credit instrument if the applicant qualifies under the creditor’s standards of creditworthiness for the amount and terms of the credit requested.”)
  • Regulation B, 12 CFR 1002.7(d)(5) (“If, under a creditor’s standards of creditworthiness, the personal liability of an additional party is necessary to support the credit requested, a creditor may request a cosigner, guarantor, endorser, or similar party. The applicant’s spouse may serve as an additional party, but the creditor shall not require that the spouse be the additional party.”