This falls in line with CFPB’s mission, which is to protect consumers from unlawful and deceptive practices and take action against companies who act unlawfully. To determine this, courts are tasked with determining if guarantor is included in the definition of an “applicant” under the ECOA.Ĭongress has mandated that the Consumer Financial Protection Bureau (“CFPB”), a bureau within the Federal Reserve system, take measures to carry out the purpose of the ECOA. The question becomes whether these spouses have a right to even bring a claim under the ECOA due to the spouse’s status of a guarantor. The spouse then files an action against the creditor requiring their guaranty, arguing that the creditor discriminated against them on the basis of marital status, thus violating the ECOA. Ĭases discussing whether or not Regulation B should be given deference typically begin with a spouse who is required to guaranty a loan made by their partner for some type of transaction. Under the ECOA, the definition of an applicant is “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.” The ECOA’s definition of an “applicant” does not explicitly include guarantors of loans. Creditors who fail to comply with the rules of the ECOA may be liable to these applicants for actual damages, punitive damages, and attorneys’ fees. Only “applicants” for credit may file lawsuits for ECOA violations. The purpose of this Act was to “eradicate credit discrimination waged against women, especially married women who creditors traditionally refused to consider for individual credit.” sex or marital status,” among other personal traits. In effect, the 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. Part V concludes that courts should not give deference to Regulation B, but rather use the definition of applicants provided in the ECOA.Ĭongress enacted the ECOA in 1974 to reflect its stance that one’s marital status - along with race, gender, and other traits- is irrelevant to the determination of one’s credit. Part IV argues that while deference to Regulation B’s interpretation of “applicant” is the proper policy decision, Congress did not intend for guarantors to be included in the definition of applicants under the ECOA. Part III looks at the reasoning of Federal Circuits that have addressed the issue. Part II discusses both the ECOA itself, and Federal Reserve Regulation B, which was designed to enforce the provisions of the ECOA. The Seventh, Eighth, and Eleventh Circuits found that guarantors should not be permitted to bring claims under the Act, while the Sixth Circuit thinks guarantors should be. This jurisdictional discrepancy is attributed to the federal circuit split on whether a guarantor of a loan is deemed an “applicant” under the ECOA, and therefore, has standing to bring a claim. These wronged guarantors have found the relief they were looking for in some jurisdictions, but not others. As such, guarantors who feel they have been wrongfully discriminated against in a credit transaction have brought claims under the Act, hoping to find relief. The ECOA was designed to protect consumers from discrimination in the financial marketplace. Last month marked the forty-fifth anniversary of the Equal Credit Opportunity Act (“ECOA”), passed by Congress in October 1974. Margo Brandenburg, Associate Member, University of Cincinnati Law Review “ Application Word Cloud” by is licensed under CC BY 2.0.
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