In my last article, “ECOA Gets More Teeth in North Carolina,”  I wrote about the recent North Carolina Court of Appeals decision, RL Regi North Carolina, LLC v. Lighthouse Cove, LLC,…,and Connie S. Yow (COA12-1279). As expected, it did not take long for this important decision to limit the enforcement of some spousal guaranties.

Approximately one month after the Lighthouse decision, Wells Fargo v. Triplett v. Triplett, was handed down by Judge Howard of the United States District Court (ED-NC). In this decision, he cited Lighthouse when he allowed an alleged violation of ECOA to be an affirmative defense to the enforcement of a nearly $3 million obligation. In Triplett, one of the numerous defendants argued Mrs. Nancy Triplett (who was since deceased) was not a joint loan applicant and her husband was creditworthy without her joining the loan. Although he did not rule on that issue (saying that question was to be ultimately determined by the trier of fact), he did allow for the argument to be a bar to recovery if the facts bore out the defendant's argument. It appears as if it is becoming accepted that in North Carolina an ECOA violation may be raised as a bar to recovering a debt. Be forewarned.

The takeaways from these new ECOA decisions are, (as outlined in our last newsletter, too):

1. Never tell a potential borrower that you require his or her spouse to sign a guaranty;
2. Do the separate credit analysis before telling a borrower that he or she needs a guarantor;
3. Expect to see more ECOA violation claims, which are becoming harder to defeat early on in litigation;
4. Never assume; and
5. Document, document, document.