It is my understanding that a lender is not permitted to request information about a spouse or former spouse of an applicant during the underwriting process. Surely, there are some exclusions where this prohibition does not apply. In what situation is a lender allowed to get such information?
Regulation B, the implementing regulation of the Equal Credit Opportunity Act (ECOA), does provide certain exceptions. However, except as permitted by Regulation B, the lender may not request information regarding the spouse or former spouse of an applicant. [12 CFR § 202.5(c)]
There are generally five situations that permit exceptions. These are:
- The spouse will be permitted to use the account;
- The spouse will be contractually liable on the account;
- The applicant is relying on the spouse’s income as a basis for repayment of the credit requested;
- The applicant resides in a community property state or is relying on property located in such a state as a basis for repayment of the credit requested; 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 credit requested.
So, a lender may request any information concerning an applicant’s spouse (or former spouse as noted in the situation above, describing reliance on alimony, child support, or separate maintenance payments), if the foregoing situation(s) apply. [12 CFR § 202.5(c)(2)]
President & Managing DirectorLenders Compliance Group