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 applicant’s marital status, religion, sex, race, or age. The Federal Reserve Board has enacted regulations to implement this law. One such regulation states that a creditor cannot require an applicant’s spouse or other person (other than a joint applicant), to sign the credit document if the applicant him or herself qualifies under the creditor’s standards of creditworthiness for the amount and terms requested.
Under the regulations, these rules include guarantors. Courts, including Florida’s First District Court of Appeals, have generally upheld the validity of this regulation on the basis that a guarantor meets the definition of an “applicant.” One could argue that the regulation is invalid because Congress referred to “applicants” in drafting the language of the ECOA, and under the plain meaning of the word, an applicant does not include guarantors. However, the majority of the case law on this issue indicates that guarantors will be protected by the ECOA, as set out in the regulations. For example, Florida’s Third District Court of Appeals said that “Congress has authorized the promulgation of federal regulations in order to enforce and administer the ECOA…. A violation of these federal regulations constitutes a substantive violation of the ECOA.” In the recent case of Bank of America, N.A. v. GREC Homes IX, LLC , the Southern District of Florida indicated that Florida courts are likely to take this position.