question... the loan officer indicates " recent changes in personal finances"...as denial..
The customer tells the officer that he is getting a divorce... and we deny the loan for the reason above..
this is a clear reg B violation... isn't it???

Under marital status - Reg. B
202.6
(8) Marital status. Except as otherwise permitted or required by law, a creditor shall evaluate married and unmarried applicants by the same standards; and in evaluating joint applicants, a creditor shall not treat applicants differently based on the existence, absence, or likelihood of a marital relationship.
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Do they have the Credit History/Income/whatever to qualify for the loan under their own steam?

There should be more specificity such as the debt ratio, but certainly NOT because they are getting divorced. This is marital status and does not appear to be what is meant. Stated this way, there are problems. 202.9 tells you that you need to provide helpful information. Stated the way your lender did, the customer and his lawyer will be the only ones helped.

If the divorse causes a change in the ability to repay the loan, then it should not be a reg B violation, if it is documented as ability to repay .

I believe that in a community property state it may also imply that the spouse's income will no longer be community property and not be included in the debt ratios.

Considering marital status is clearly prohibited by Reg B. However, a change in marital status may be a pertinent element of creditworthiness just as it is for age, even though the regulation does not explicitly say so. The delicate issue here is how to consider income. I think it would be wrong to simply deny because a change is expected. However, if the borrower has been honest and given information about the expected future debt and income situation, that is how they should be evaluated. The individual/married/combined income criteria should be used just as they would be for someone whose marital status was not changing.

Reg B 202.7(c) specifically addresses this issue:

"(c) Action concerning existing open-end accounts;(1) Limitations. In the absence of evidence of the applicant's inability or unwillingness to repay, a creditor shall not take any of the following actions regarding an applicant who is contractually liable on an existing open-end account on the basis of the applicant's reaching a certain age or retiring or on the basis of a change in the applicant's name or marital status:
(i) Require a reapplication, except as provided in paragraph (c)(2) of this section;
(ii) Change the terms of the account; or
(iii) Terminate the account.
(2) Requiring reapplication. A creditor may require a reapplication for an openend account on the basis of a change in the marital status of an applicant who is contractually liable if the credit granted was based in whole or in part on income of the applicant's spouse and if information available to the creditor indicates that the applicant's income may not support the amount of credit currently available."

It's pretty clear when you can and when you can't require a re-evaluation. Either you relied on the spouse's income or thay fall past due. An automatic denial equates to "Do Not Pass Go - Do Not Collect $200".