Section 202.7(d)(2) provides an exception for unsecured credit. If an applicant is relying on property to satisfy your credit standards and the property is owned jointly with another person, you can require the joint owner’s signature only on the instrument that enables the credit union to reach the property in the event of the applicant’s death or default on the loan.

Has anyone used this exception and what sort of instrument did you rely on? We are tired of writing off credit card debt in cases where one spouse takes out credit and then dies. Ownership of property generally transfers(to surviving spouse) at death so we get nothing. Any ideas?

What do you have the second spouse sign at time of loan that is not a guarantee of payment but will allow you to access property?

Thanks

As 202.7(d)(2) states that will depend on the instruments required by the state in which the property is located which in most cases absent a security agreement will be the note itself.

This is a question for your legal counsel, as it will be State dependant and most likely can't really be accomplished without violating other provisions of Reg. B. It would be hard to justify, as Dan pointed out, getting them to sign the note. Unsecured is just that, unsecured.

Thanks Guys. I was thinking the same thing and tend to agree with what R said, unsecured is unsecured.

I'll pass this on to local counsel if Mgmt. wants to pursue further.