In our view, requiring only the borrowing spouse to sign the promissory note and requiring both spouses to sign a mortgage, including a homestead waiver, does not raise any Regulation B or lien perfection concerns.

Regulation B prohibits lenders from requiring a spouse to sign credit documents unless the spouses expressly apply for joint credit. There is an exception, however, for documents that spouses must sign under state law to make the property securing the loan “available to satisfy the debt in the event of default.” (An example of one such law is Illinois’ homestead waiver, which may be included in a mortgage and must be signed by the non-borrowing spouse.) 

Illinois law does not require a non-borrowing spouse to sign the note in order for a lender to perfect its lien. Hence, in the court decision you referenced — OneWest Bank FSB v. Cielak — the Illinois appellate court held that it is not necessary for the non-borrowing spouse to sign the note in order to grant a lien on the real estate owned in tenancy by the entirety. It is sufficient for the non-borrowing spouse to sign the mortgage securing the borrowing spouse’s loan.

Consequently, a policy requiring one spouse's signature on the note and both spouses' signatures on the mortgage and homestead waiver will comport with both Regulation B and Illinois lien laws.

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)(4) (“If an applicant requests secured credit, a creditor may require the signature of the applicant's spouse or other person on any instrument necessary, or reasonably believed by the creditor to be necessary, under applicable state law to make the property being offered as security available to satisfy the debt in the event of default, for example, an instrument to create a valid lien, pass clear title, waive inchoate rights, or assign earnings.”) 

• Illinois Code of Civil Procedure, 735 ILCS 5/12-904 (“No release, waiver or conveyance of the estate so exempted shall be valid, unless the same is in writing, signed by the individual and his or her spouse, if he or she have one . . . .”)

• Illinois Code of Civil Procedure, 735 ILCS 5/12-112  (“Any real property . . . held in tenancy by the entirety shall not be liable to be sold upon judgment entered on or after October 1, 1990 against only one of the tenants, except if the property was transferred into tenancy by the entirety with the sole intent to avoid the payment of debts existing at the time of the transfer beyond the transferor's ability to pay those debts as they become due.”) 

• OneWest Bank FSB v. Cielak, 2016 Il App (3d) 150224, ¶ 22 (“Real estate held as tenants by the entirety protects a spouse against having his or her homestead property sold to satisfy the individual debts of the other spouse. However, where both spouses are judgment debtors, borrowers or guarantors, their real estate is not protected from judgment based on their ownership as tenants by the entirety. Here, the [spouses] granted a consensual lien on their real estate by mortgaging their property to secure payment of the loan to [the borrowing spouse]. Because both are obligated under the lien, their real estate is not protected by their ownership of the property as tenants by the entirety.”) (internal citations and quotations omitted)