Regulation B states …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. In other words, a financial institution cannot make/require anyone to be liable for a debt (i.e., sign the note, guarantee, etc.) There are, of course, some exemptions when it comes to requiring a guarantee from directors, officers, shareholders, etc. of closely held corporations but, for the most part, liability must be voluntary. If husband and wife apply together, as joint applicants, there is no issue. If husband applies individually, regardless of whether he qualifies or not, you cannot require his spouse (or anyone for that matter) to be obligated on the loan. If needed, you can ask for a qualified co-signer but cannot name one. You could, however, require the spouse to sign any security documents needed to release the collateral.
Jerod explains more in the video.
Published
2024/12/16
