Equal Credit Opportunity Act

Happy New Year! We sincerely hope that 2015 brings you great success and many new quality loans. One of the most important things a lender can do when writing a new loan is consider the available assets of a borrower, just in case the loan becomes non-performing. Historically, lenders have been less inclined to require a non-borrowing spouse to guaranty a loan, for fear of repercussions under the Equal Credit Opportunity Act. In an opinion on January 7, 2015, Florida’s 4th District Court of Appeal has provided a little clarity and an opportunity for a lender to better secure itself at loan inception. The case of Richardson v. Everbank, 2015 WL 71850 (Fla. 4th Dist. 2015), citing several cases from around the country, states that it is sound commercial practice for the creditor to require a spouse to guarantee a debt where assets relied upon in the credit application were jointly owned. The Court determined that the spouse’s guarantee may have been fiscally responsible and prudent so the bank could reach the property listed in the financial statement in the event of a default.

Remember that each loan is unique and requires independent analysis. We strongly urge you to seek legal counsel prior to closing such transaction. If you have further questions or if we can be of any assistance, please do not hesitate to contact us.