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 the Eighth Circuit—to decide whether certain guarantors are excluded from the definition of "applicant" under the Equal Credit Opportunity Act (ECOA), 15 U.S.C. § 1691 et seq., and whether the Federal Reserve Board (FRB) had the authority under the ECOA to include certain guarantors as "applicants" in Regulation B, 12 C.F.R. pt. 1002 et seq. A decision by the Court could resolve a circuit court split between the Sixth and Eighth Circuits.


The ECOA provides that it is "unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction" on a number of bases, including marital status. See 15 U.S.C. § 1691. While the ECOA defines "applicant" as "any person who applies to a creditor directly for an extension, renewal, or continuation of credit, or applies to a creditor indirectly by use of an existing credit plan for an amount exceeding a previously established credit limit" (15 U.S.C. § 1691a(b)), Regulation B sets forth its own definition, which is broader than the statute and allows guarantors to sue for violations of the spouse-guarantor rule. See 12 C.F.R. § 1002.2(e) (defining "applicant" under Regulation B); 12 C.F.R. § 1002.7(d)(5) ("The applicant's spouse may serve as an additional party [supporting the application], but the creditor shall not require that the spouse be the additional party.").

At issue in Hawkins is whether the ECOA's definition of "applicant" includes guarantors such that a spousal guarantor can enforce the protection from marital status discrimination under the ECOA. According to the Eighth Circuit, the "text of the 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 another." The Eighth Circuit reasoned that a person does not request credit by "executing a guaranty" because a "guaranty is collateral and secondary to the underlying loan transaction between the lender and the borrower." As a result, the Eighth Circuit concluded that it would not need to rule on the reasonableness of the FRB's interpretation of "applicant" because the plain meaning of the statute is "unambiguous" and...

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