Guarantors

News & Analysis as of

Sham Guaranties Are Hard To Come By

In prior posts I highlighted the difficult position occupied by guarantors of real estate secured loans. In short, while California law extends very strong anti-deficiency protections to borrowers, those same protections can...more

Supreme Court to Determine Whether ECOA Allows Spousal Guarantors to Challenge Liability

On March 2, 2015, the Supreme Court of the United States granted certiorari in Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937 (8th Cir. 2014), cert. granted, No. 14-520, 2015 U.S. LEXIS 1635 (U.S. Mar. 2, 2015)—on appeal from...more

Supreme Court to Hear Case Deciding the Rights of Spousal Loan Guarantors under the Equal Credit Opportunity Act

The United States Supreme Court will soon hear a case that will determine the rights of spousal guarantors under the Equal Credit Opportunity Act (“ECOA”), and ultimately whether creditors may require spousal guarantors on...more

U.S. Supreme Court To Hear Arguments Involving Guarantor-Spouse’s Eligibility for ECOA Protection

On March 2, the U.S. Supreme Court agreed to hear arguments to resolve claims as to whether spousal guarantors could assert ECOA as a defense against a bank’s collection efforts requiring them to guarantee their spouse’s...more

U.S. Supreme Court to Decide Whether ECOA Applies to Loan Guarantors

The U.S. Supreme Court has agreed to review whether the Equal Credit Opportunity Act (ECOA) applies to loan guarantors. The case will be argued in the Supreme Court’s term that begins in October 2015....more

An “Applicant” By Any Other Name – The U.S. Supreme Court Jumps in on ECOA and Guarantors

As the Bard’s Juliet famously mused, “What’s in a name? That which we call a rose by any other name would smell as sweet.” One might similarly wonder at the U.S. Supreme Court’s decision yesterday (March 2, 2015) to grant...more

N.C. Court of Appeals Addresses "Offset" Defense In Loan Deficiency Claims, the Ownership Element of Trespass

The Court of Appeals issued a number of decisions today, while snow and ice ghosted the City of Raleigh. The Court addressed trespass to land, the availability of the "offset" defense to commercial loan guarantors. Let's...more

The GPMemorandum, Issue 190

In this Issue: - Court Grants Preliminary Injunction Enforcing Covenant Not To Compete Against Former Franchisee - Ninth Circuit Affirms Summary Judgment In Franchisor's Favor - Seventh Circuit Finds No...more

Supreme Court of Washington Clarifies Guarantor Liability for Deficiency Judgments

The Supreme Court of Washington has upheld a lender’s right to pursue a deficiency judgment against a guarantor following a nonjudicial foreclosure of collateral under Washington’s Deed of Trust Act (the “Act”). The court’s...more

Attorney Fees: Following Local Law Can Mean the Difference Between Collecting or Not

Southside, LLC v SunTrust Bank (In re Southside, LLC), 520 B.R. 914 (Bankr. N.D. Ga. 2014) – A debtor objected to attorney fees included in the proof of claim filed by a mortgagee, and the mortgagee moved for relief...more

Money, Dirt & Steel: 2014-2015 NC Real Property Litigation Update

A snapshot of noteworthy cases from the past year related to lending practices, property rights and construction in North Carolina. Money - Lending: Comprehensive waiver language in loan workout...more

Deference in Decline: ECOA’s Regulation B and Agency Discretion Might Not Be Broad Enough to Include Spousal Guarantors

For more than 40 years, the Equal Credit Opportunity Act (‘‘ECOA’’) has prohibited lenders from discriminating against applicants for credit on various prohibited bases, including marital status. The policy reasons for such...more

Washington Supreme Court Affirms Washington Federal v. Gentry and Confirms Lenders’ Right to Obtain Deficiency Judgments Against...

The Washington Supreme Court issued an opinion today affirming the right of a lender to obtain a deficiency judgment against a commercial guarantor following a nonjudicial foreclosure. Divisions One and Two of the Washington...more

Staying Off the Hook - Managing the Evolving Bad-Boy Guaranty

As the financial crisis of 2008 drifts further into the rear-view mirror, the cost of capital available for commercial real estate financing is historically low and accessible, frequently coming in the “non-recourse” variety...more

Guarantor Waivers Narrowed

A general waiver by a guarantor of “all defenses” does not actually waive “all defenses.” California Bank & Trust v. Del Ponti, — Cal.Rptr.3d —, 2014 WL 6908141 (Cal.App. 4 Dist.). That was the holding in a recent opinion...more

Eighth Circuit Finds Guarantors Not Afforded Protections under the Equal Credit Opportunity Act

The application of the Equal Credit Opportunity Act (ECOA) to spousal guaranties is a developing area of law, resulting in a number of recent appellate opinions. One opinion from the Eighth Circuit Court of Appeals, Hawkins...more

Spouse-Guarantor Rule: A Split Between Federal Circuit Courts

When a closely-held entity applies for a loan, the financial institution usually requires the entity’s owner(s) to guaranty the loan. If the owner is married, the financial institution may also require the owner(s) spouse(s)...more

North Carolina Supreme Court Upholds Enforceability of Waiver of ECOA Claim

Last month, the North Carolina Supreme Court issued an important opinion for lenders in this state. The opinion reversed the North Carolina Court of Appeals’ decision in RL REGI N.C., LLC v. Lighthouse Cove, LLC, which found...more

CLIENT ALERT: Arizona Supreme Court to Decide if Borrowers and Guarantors Can Waive Fair Market Value Defense

In September 2013, the Arizona Court of Appeals held that commercial borrowers and guarantors cannot prospectively waive their right to seek a fair market value hearing to limit their potential deficiency liability following...more

Eighth Circuit Opens Circuit Split on the Scope of the Equal Credit Opportunity Act

The Equal Credit Opportunity Act (ECOA) makes it unlawful for any creditor “to discriminate against any applicant, with respect to any aspect of a credit transaction . . . on the basis of . . . marital status.” The statute...more

N.C. Supreme Court Issues Significant Ruling On Commercial Forbearance Agreements and Spousal Guaranties

On August 20, 2014, the North Carolina Supreme Court issued an opinion giving great weight to properly-drafted forbearance agreements in a commercial loan and guaranty context. RL REGI N.C., LLC v. Lighthouse Cove, LLC, No....more

Do Guarantors Fall under the Protection of the Equal Credit Opportunity Act?

We have discussed the Equal Credit Opportunity Act (“ECOA”), which makes it unlawful for a creditor to discriminate against an applicant in any aspect of a credit transaction on the basis of, among other things, the...more

North Carolina Supreme Court Clarifies the Enforceability of Waivers and Releases of Claims and Defenses in Forbearance Agreements

On August 20, 2014, the North Carolina Supreme Court issued an opinion clarifying the enforceability of waivers and releases of claims and defenses granted by borrowers and guarantors in forbearance agreements. RL REGI N.C.,...more

Guarantors Are Not Protected by the Equal Credit Opportunity Act, Eighth Circuit Holds

The U.S. Court of Appeals for the Eighth Circuit recently upheld summary judgment in favor of a lender, dismissing an action by the borrowers’ spouses alleging that the lender’s requirement that the spouses sign guaranties...more

Eighth Circuit Holds Loan Guarantors Are Not Applicants Under ECOA

On August 5, the U.S. Court of Appeals for the Eighth Circuit held that ECOA clearly provides that a person does not qualify as an applicant under the statute solely by virtue of executing a guaranty to secure the debt of...more

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