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

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.