Equal Treatment of Same-Sex Married Couples
A recent Supreme Court ruling changes how financial intuitions comply with the ECOA, FDCPA, TILA and RESPA. Failure to comply could result in lawsuits and enforcement actions. Every financial institution should update its policies and procedures.
On June 26, 2013, in United States v. Windsor, the Supreme Court struck down as unconstitutional section 3 of the Defense of Marriage Act (DOMA). Section 3 of DOMA provided, “In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ’spouse’ refers only to a person of the opposite sex who is a husband or a wife.”
The Supreme Court’s action changes, to some extent, how financial institutions comply with the Equal Credit Opportunity Act (ECOA), Fair Debt Collection Practices Act (FDCPA), Truth in Lending Act (TILA), and Real Estate Settlement Procedures Act (RESPA). Each of these laws use the terms “spouse,” “marriage,” “married,” “husband” and “wife.”
The CFPB has stated that its policy is, “to the extent federal law permits and consistent with the legal position announced by the U.S. Department of Justice in interpreting relevant statutes, regulations and policies, to recognize all marriages valid at the time of the marriage in the jurisdiction where the marriage was celebrated.” Accordingly, the Bureau will regard a person who is married under the laws of any jurisdiction to be married nationwide for purposes of the federal statutes and regulations under the Bureau’s jurisdiction regardless of the person’s place of residency. Consistent with other federal agencies, the CFPB will not regard a person to be married by virtue of being in a domestic partnership, civil union, or other relationship not denominated by law as a marriage.
The CFPB will use the terms “spouse,” “marriage,” “married,” “husband,” “wife,” and any other similar terms related to family or marital status in statutes, regulations, and policies administered, enforced, or interpreted by the Bureau to include same-sex marriages and married same-sex spouses.
This issue raises some tough questions, including:
- Was a marriage lawful when and where it was celebrated?
- Do lenders need to perform due diligence to determine if a couple is married, when they were married and where were they married?
- Is the act of performing such due diligence discriminatory?
- Which regulations are impacted by the changes?
- What actions are needed to assure compliance?
- What are best practices until the CFPB provides detailed guidance in the form of revised regulations or updated Commentary?
Failure to comply could result in lawsuits by consumers or the Department of Justice and enforcement actions. Every financial institution must update its policies and procedures to reflect:
- The impact of the Supreme Court’s Windsor case;
- Which regulations are impacted by the court’s decision;
- Which requirements are impacted by the court’s decision; and
- How you should revise policies and procedures to assure compliance.
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Mortgage loan department management, trainers, compliance officers, auditors and others with responsibilities for assuring compliance with federal lending law.
Jack Holzknecht, Principal, Pegasus Educational Services, LLC
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