The Equal Credit Opportunity Act and Same Sex Marriage

Bankers and others lenders are required to comply with the Equal Credit Opportunity Act (“ECOA”), codified at 15 U.S.C. § 1691, et seq., which generally makes it unlawful for any creditor to discriminate against any credit applicant on the basis of race, religion, national origin, sex, marital status, or age. This can present challenges when loaning money to a married individual. In states that recognize marital property, a creditor may want the right to collect on a loan against both spouses to avoid the prospect of property being exempt. Despite this natural preference, a bank may not be able to require that a borrower’s spouse be a joint applicant or a guarantor for credit if the applicant has good enough credit to apply individually.

This restriction now appears to extend to same-sex marriages. Such marriage is currently legal in thirty-seven states, and challenges to restrictions of same-sex marriage are being litigated in several of the remaining thirteen states.

While the Courts have yet to weigh in on the ECOA implication of same-sex marriages, the better practice is to assume that ECOA’s restrictions will apply to all married couples, whether such marriages are traditional or same-sex. There are several reasons for this conclusion. For one, much of ECOA’s language is gender-neutral. In addition, the Consumer Financial Protection Bureau, which is charged with enforcing ECOA, issued a memorandum on June 25, 2014, proclaiming that the terms “spouse,” “marriage,” “marries,” “husband,” “wife,” and other similar terms concerning family or marital status should be interpreted to include same-sex marriages and same-sex spouses in ECOA and other statutes. Similar memoranda have been issued by the Office of the Attorney General and the Internal Revenue Service.

In light of this, lenders would be prudent to apply the same credit policies for same-sex spouses that they apply to opposite-sex spouses. Failing to do so may result in liability under ECOA.