The Philadelphia Reserve Board recently released its quarterly Consumer Compliance Outlook. Within the current issue, the Board cites common compliance exam violations from 2011 including one in particular related to Regulation B – Equal Credit Opportunity Act.
In the report, the Board indicated that one of the most common compliance violations has dealt with spousal signatures on loans, particularly the joint intent of spousal applicants.
The official staff interpretations (Supplement I) to Section 1002.7(d)(1) of Regulation B, states that “a person’s intent to be a joint applicant must be evidenced at the time of application.” Supplement I goes on further to state that “signatures on a promissory note may not be used to show intent to apply for joint credit. On the other hand, signatures or initials on a credit application affirming applicants’ intent to apply for joint credit may be used to establish intent to apply for joint credit.”
I mention this because this has been a common issue I have found during my many visits to credit unions. I find that the section for members to affirm their intent to apply jointly has either not been completed or the credit applications do not contain a separate area for the members to affirm their intent.
If you are not currently checking your credit applications for the proper intent to apply jointly, now would be a good time to include this on your loan review checklist.