The Supreme Court agreed to settle the issue of whether spousal guarantors should be considered applicants and whether the Federal Reserve has the authority to create regulations to accomplish this under the Equal Credit Opportunity Act (ECOA). Since ECOA does not include guarantors in its definition of applicants, a split has arisen among circuits regarding the rule, established by the Federal Reserve under Regulation B, that considers spousal guarantors as applicants in assessing discrimination based on marital status (JDSupra, 6/19/2015):
Interpreting the language of the ECOA and the Federal Reserve Board’s regulations, the Eighth Circuit Court of Appeals in Hawkins v. Community Bank of Raymore held that the Federal Reserve Board impermissibly expanded the protections provided under the ECOA to an extent not originally contemplated by Congress when it passed the Act. The Sixth Circuit Court of Appeals in RL BB Acquisition LLC v. Bridgemill Commons Development Group, LLC, meanwhile, determined that the Federal Reserve Board only clarified exactly which individuals Congress meant to protect through the ECOA. The Sixth Circuit relied heavily on public policy in reaching its conclusion, finding that including guarantor spouses under the ECOA’s protections aligned with the overall goal of the statute: “to eradicate credit discrimination waged against women, especially married women whom creditors traditionally refused to consider for individual credit.”
An amicus brief was recently filed by the CFPB, arguing that deference should be given to the existing rule under Regulation B since Congress has amended ECOA several times over the years without making any changes to the existing regulations regarding spousal guarantors.