Reg B [12 C.F.R. Part 202] provides that every person is entitled to apply for credit individually. It restricts the Bank’s ability to require both spouses to sign a promissory note when only one spouse has applied for the loan and qualified under the Bank’s usual standards of creditworthiness. See the Regulation B Notice of Intent to Apply for Joint Credit form located at the end of this Chapter which is used to document the application for joint credit.
The Equal Credit Opportunity Act (ECOA) implemented through Reg B is designed to promote the availability of credit to creditworthy applicants without regard to:
•Race;
•Color;
•Religion;
•National origin;
•Sex;
•Marital status;
•Age (provided that the applicant has the capacity to enter into a binding contract);
•The fact that all or part of the applicant’s income derives from any public assistance program; or
•The fact that the applicant has in good faith exercised any right under the Consumer Credit Protection Act.
Unless otherwise prohibited, a creditor may request any information in connection with an application.
Reg B requires the Bank to notify applicants of action taken on their applications. When credit is denied a Notice of Denial, Counteroffer or Incomplete Action should be sent. It also requires the Bank to retain records of credit applications.
Because Texas is a community property state, Banks in Texas may inquire about marital status if the applicant lives in Texas or plans to use property located in Texas as collateral. The Bank may also request information concerning the spouse or former spouse of an applicant if:
•The spouse will be contractually liable on the loan;
•The applicant is relying on the spouse’s income as a basis for repayment of the loan;
•The applicant resides in a community property state, or the property which is a basis for repayment of the audit is located in such a state; or
•The applicant is relying on alimony, child support, or separate maintenance payments from a spouse or former spouse as a basis for repayment of the loan;
•Where the real estate being pledged is the separate property of the debtor, Community Property Disclaimer Deed should be executed by the non-owner spouse.