11th Circuit Rules that Guarantor Does Not Qualify as “Applicant” Under ECOA

Weiner Brodsky Kider PC
Contact

Weiner Brodsky Kider PC

Finding that a guarantor is not an “applicant” under ECOA, the Eleventh Circuit affirmed a district court’s summary judgment against a husband and wife who claimed that a bank discriminated against them based on their marital status by allegedly demanding that the wife guarantee her husband’s business loan.

The issue on appeal was whether spousal guarantors are covered by certain provisions of ECOA that prohibit discrimination against an “applicant.”  Regulations issued by the Federal Reserve Board defined the term “applicant” to include guarantors.  In deciding whether to defer to the regulations, the court engaged in a Chevron analysis, which generally requires a court to ask first whether the underlying statute is ambiguous, and if the meaning is clear, the inquiry ends and the court applies the clear meaning of the provision. 

Based on a reading of ECOA, the Eleventh Circuit held that the statutory definition of “applicant” unambiguously excluded guarantors because a guarantor does not seek credit to benefit himself.  As a result, the court did not defer to the Federal Reserve Board’s regulations, and found that the wife lacked statutory standing under ECOA.

In holding that a guarantor is not an “applicant” under ECOA, the Eleventh Circuit joins similar holdings by the Seventh and Eighth Circuits.  On the other hand, the Sixth Circuit previously reached the opposite conclusion, finding that guarantors should be considered “applicants” pursuant to the regulations.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Weiner Brodsky Kider PC | Attorney Advertising

Written by:

Weiner Brodsky Kider PC
Contact
more
less

Weiner Brodsky Kider PC on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.