A married borrower in a community property state applies alone for a $355,000 loan. Her husband will not be on the note. Subject to applicable law and program rules, what involvement may be required from a non-borrowing spouse without making him a note obligor?
Correct Answer
C) Relevant spouse information may be requested, and a security-instrument signature may be needed under applicable law
C. Permitted information requests and necessary lien signatures need not make the spouse a note obligor. Regulation B permits spouse-information inquiries in specified community-property circumstances. For secured credit, required signatures are limited to instruments necessary or reasonably believed necessary under state law to make the collateral available. Scope and exceptions: This is not blanket permission to obtain any credit report or impose every spouse debt under every program. Applicable reporting law and program rules remain separate. State law can change which instruments are necessary. Source: Section 1002.5(c)(2)(iv) — https://www.consumerfinance.gov/rules-policy/regulations/1002/5/ Section 1002.7(d)(4); comments 7(d)(4)-1 through -3 — https://www.consumerfinance.gov/rules-policy/regulations/1002/7/
Why This Is the Correct Answer
C. Permitted information requests and necessary lien signatures need not make the spouse a note obligor. Regulation B permits spouse-information inquiries in specified community-property circumstances. For secured credit, required signatures are limited to instruments necessary or reasonably believed necessary under state law to make the collateral available. Scope and exceptions: This is not blanket permission to obtain any credit report or impose every spouse debt under every program. Applicable reporting law and program rules remain separate. State law can change which instruments are necessary.
Why the Other Options Are Wrong
Option A: He must sign the note, though his income need not be counted at all
A note signature is not automatically required when a security agreement suffices.
Option B: He must be a co-borrower, because community property makes the 2 of them liable
Marriage does not automatically require a joint application.
Option D: He has no involvement at all, since only the borrower signs anything
It overlooks possible state-law collateral-signature requirements.
Exam Tip
Distinguish a lien signature from a promise to repay.
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