     Case: 15-20710     Document: 00513879465     Page: 1    Date Filed: 02/16/2017




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT      United States Court of Appeals
                                                        Fif h Circuit

                                                                             FILED
                                                                        February 16, 2017
                                   No. 15-20710
                                                                          Lyle W. Cayce
                                                                               Clerk
TINA ALEXANDER; SHEILA ALEXIS; EVELYN BAINES; SHAUNTAY
BENNINGS; NYO HAYGOOD; TABITHA HENRY; CHEYANNE JONES;
ROSLYN JONES; KENDRA WILLIAMS; KYSHIA WOODS; ZACHARY
BAYLOR; TRACEY KENNERLY,

               Plaintiffs - Appellants

v.

AMERIPRO FUNDING, INCORPORATED; AMEGY BANK NATIONAL
ASSOCIATION; WELLS FARGO BANK, N.A.,

               Defendants - Appellees




                  Appeals from the United States District Court
                       for the Southern District of Texas


Before JOLLY, BARKSDALE, and SOUTHWICK, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
      The Equal Credit Opportunity Act (“ECOA”), 15 U.S.C. § 1691 et seq.,
was enacted, in relevant part, in order to “promote the availability of credit to
all creditworthy applicants without regard to . . . the fact that all or part of the
applicant’s income derives from a public assistance program.” See 12 C.F.R.
§ 202.1.     The ECOA specifically makes it illegal “for any creditor to
discriminate against any applicant, with respect to any aspect of a credit
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                                       No. 15-20710
transaction . . . because all or part of the applicant’s income derives from any
public assistance program.” 15 U.S.C. § 1691(a)(2).
       Plaintiffs are twelve individuals in the Houston, Texas, area who receive
Section 8 housing assistance. 1 Each plaintiff wanted to purchase a home, and
each wanted to obtain a mortgage in order to finance their proposed purchase
of a home. Each plaintiff either applied for a mortgage or sought information
regarding a mortgage from either AmeriPro Funding, Inc., or Wells Fargo
Bank, N.A.
       Wells Fargo, they allege, was engaged in the business of investing in or
buying mortgages originated by other financial institutions, including
AmeriPro. AmeriPro, as an originator, interacted with borrowers, made credit
decisions, and actually gave mortgages to home buyers. Wells Fargo, as a
purchaser and investor in mortgages, promulgated guidelines for its
secondary-market mortgage purchases, stating that it would only buy
mortgages that are not based on Section 8 income.
       Those plaintiffs who applied for mortgages with AmeriPro allege that,
with the Wells Fargo guidelines in mind, AmeriPro refused to consider their
Section 8 income in assessing their creditworthiness in its evaluation of their
mortgage applications so that it could sell the mortgages to Wells Fargo on the
secondary market.
       Other plaintiffs applied directly to Wells Fargo in its capacity as a
mortgage originator, and they allege that it similarly refused to consider their
Section 8 income.




       1 See 42 U.S.C. § 1437f(a) (“For the purpose of aiding low-income families in obtaining
a decent place to live and of promoting economically mixed housing, assistance payments
may be made with respect to existing housing in accordance with the provisions of this
section.”).

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                                       No. 15-20710
      The plaintiffs filed suit against both AmeriPro and Wells Fargo, claiming
that they discriminated against them in violation of the ECOA on the basis of
their receipt of public assistance income.                The district judge granted
defendants’ Rule 12(b)(6) motion and dismissed all of plaintiffs’ claims.
Plaintiffs have timely appealed.
      We affirm the dismissal of several, but not all, of plaintiffs’ claims: some
plaintiffs failed plausibly to allege that they were “applicants” under the
ECOA; some plaintiffs failed plausibly to allege that Wells Fargo was a
“creditor” under the ECOA; and some plaintiffs failed plausibly to allege that
Wells Fargo engaged in any discriminatory conduct against them. We hold,
however, that some plaintiffs did plausibly allege ECOA violations by
AmeriPro, and reverse the district court’s dismissal of those claims. In short,
we affirm in part and reverse and remand in part.
                                             I.
      In reviewing a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), this Court “accepts all well-pleaded facts as true, viewing them in the
light most favorable to the plaintiff.” Martin K. Eby Const. Co. v. Dallas Area
Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004) (citations and quotations
omitted). Keeping in mind that the ECOA prohibits “discriminat[ion] against
any applicant, with respect to any aspect of a credit transaction . . . because all
or part of the applicant’s income derives from any public assistance program,”
15 U.S.C. § 1691(a)(2), we set forth the allegations in the plaintiffs’ Complaint. 2
      As we have noted, plaintiffs are twelve individuals in the Houston, Texas
area. All sought to qualify for a loan to purchase a home. All received public
assistance income in the form of Section 8 housing vouchers, and all sought to
use that income to make payments towards their desired new home mortgages.


      2   References to the Complaint refer to plaintiffs’ Third Amended Complaint.
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                                    No. 15-20710
      The essence of the plaintiffs’ claim is that the lenders to whom they
applied—defendants AmeriPro Funding, Inc. and Wells Fargo Bank, N.A.—
refused, in violation of the ECOA, to consider their Section 8 voucher income
in determining whether they were financially qualified for a loan. 3 Plaintiffs
claim that Wells Fargo had an explicit, publicly-available policy stating that in
its secondary mortgage purchasing division—which would invest in or
purchase mortgages originated by another financial institution—it would not
purchase mortgages based on Section 8 income. As the Complaint alleges:
      76.    During all relevant periods of time, Defendant Wells Fargo
             Bank was a correspondent lender, who set up guidelines to
             purchase certain closed loans from creditors such as
             Defendant AmeriPro Funding.
      77.    In its capacity as a correspondent lender, Defendant Wells
             Fargo Bank provided lending guides required to be utilized
             by creditors, such as Defendant AmeriPro Funding, seeking
             to sell its loans and in extending credit to applicants, such
             as Plaintiffs. . . .
      79.    Wells Fargo Bank’s own publically available policy states:
             Wells Fargo will not accept transactions including, but not
             limited to, the following:
             ...
             FHA Section 8 loans
             Wells Fargo Funding Seller Guide 600.02(b).
      It further alleges that AmeriPro, a mortgage originator, unlawfully
refused to consider Section 8 income so that it could sell its newly-originated
mortgages to Wells Fargo:
      69.    Additionally, Defendant AmeriPro Funding denied credit
             and financing to Plaintiffs . . . because it claims it did not
             have an investor that would purchase a loan that allowed for



      3 One plaintiff also brought similar claims against another financial entity, Amegy
Bank, N.A. Those claims settled.
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                                  No. 15-20710
            their Section 8 income to be utilized in calculating the debt
            to income ratio and for qualifying purposes.
      70.   Because Defendant AmeriPro Funding would not use the
            Section 8 voucher in its loan decision, Plaintiffs . . . could not
            secure a certain size mortgage. . . .
      72.   Defendant AmeriPro Funding sold their mortgage loans to
            other financial institutions, including Defendant Wells
            Fargo Bank.
      73.   As part of the correspondent lending practices of Wells Fargo
            Bank, any loans that Defendant AmeriPro Funding sold to
            Defendant Wells Fargo Bank had to meet the lending
            guidelines for Wells Fargo Bank.
      74.   During the time of Plaintiffs’ loans and loan inquires made
            the basis of this lawsuit, Defendant AmeriPro Funding was
            informed by Defendant Wells Fargo Bank that the bank’s
            lending guidelines did not allow the receipt of Section 8
            income to be considered as qualifying income for
            determining whether an applicant qualifies for a loan and
            the calculation of the amount the applicant would be able to
            borrow.
      Under these broad allegations, the plaintiffs appear to fall into three
distinct groups.
                                        A.
      The first group includes four plaintiffs—Alexander, C. Jones, Williams,
and Woods—the “AmeriPro Applicants.” The AmeriPro Applicants allege that
they actually applied for loans with AmeriPro:
      75.   At least four Plaintiffs (Tina Alexander, Cheyanne Jones,
            Kendra Williams and Kyshia Woods), applied for loans with
            Defendant AmeriPro Funding which Defendant AmeriPro
            Funding processed with the intention of selling the loan to
            Defendant Wells Fargo Bank.
      Each of the AmeriPro Applicants specifically alleges that she applied for
a mortgage through AmeriPro, that the mortgage was processed with respect
to Wells Fargo’s lending guidelines, that her Section 8 income was not included


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                                       No. 15-20710
for consideration as part of the application, and that she obtained a mortgage
on less favorable terms than if that income had been considered. For example:
      85.      Plaintiff Cheyanne Jones applied for a mortgage loan in
               approximately the summer of April 2012 with Defendant
               AmeriPro Funding which was processed using Defendant
               Wells Fargo Bank’s lending guidelines since Defendant
               AmeriPro Funding intended to sell this loan to Defendant
               Wells Fargo Bank.

      86.      Plaintiff Cheyanne Jones’ Section 8 income was not included
               for consideration as part of her mortgage application.

      87.      As a result of her Section 8 income not being considered as
               income on her mortgage application, Cheyanne Jones
               obtained less favorable mortgage terms and qualified for a
               mortgage at a lesser amount than if her Section 8 income
               had been considered. 4

      Plaintiff Tina Alexander made similar allegations, but was even more
specific:
      84.      ...
               c.     When Alexander was told that her Section 8 income
                      would not qualify as income on her mortgage
                      application, she was told she would not qualify for a
                      thirty year mortgage with the payments she wanted,
                      and a house at a certain price level; and after being
                      told that Alexander applied for a mortgage in
                      accordance with the terms she was told she would
                      qualify for without her section 8 income being
                      considered as income on her mortgage application.
      In sum, the AmeriPro Applicants allege that they applied for mortgages
through AmeriPro and that AmeriPro did not consider their Section 8 income
in processing the application because it intended to sell the mortgages to Wells
Fargo.



      4   Plaintiffs Williams and Wood made substantively identical allegations in ¶¶ 88–93.

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                                       No. 15-20710
                                              B.
       The second group includes six plaintiffs—Alexis, Baines, Bennings,
Haygood, Henry, and R. Jones—the “AmeriPro Inquirers.” 5
       The difference between the AmeriPro Inquirers and the AmeriPro
Applicants is that the Inquirers never allege that they applied for mortgages
with AmeriPro. 6 These plaintiffs allege only that:
       61.    In addition to the foregoing allegations, [the AmeriPro
              Inquirers] also specifically requested financing and/or credit
              from Defendant AmeriPro Funding through various
              employees, agents and servants.
       62.    [The AmeriPro Inquirers] contacted and made inquiry to
              Defendant AmeriPro Funding as to financing a home that
              each of them desired.
       63.    Based on information and belief to date, [the AmeriPro
              Inquirers] contacted Defendant AmeriPro Funding during
              various months of the calendar years 2011 to and including
              2014. . . .
       69.    Additionally, Defendant AmeriPro Funding denied credit
              and financing to [the AmeriPro Inquirers] . . . because it
              claims it did not have an investor that would purchase a loan
              that allowed for their Section 8 income to be utilized in
              calculating the debt to income ratio and for qualifying
              purposes.




       5Wells Fargo points out that four of these plaintiffs—Alexis, Baines, Henry, and R.
Jones—voluntarily dismissed their claims against it without prejudice. The remaining two—
Bennings and Haygood—are still pursuing claims against Wells Fargo, and all six are
pursuing claims against AmeriPro.

       6  At oral argument, plaintiffs’ counsel insisted that all plaintiffs, including the six
plaintiffs we call the AmeriPro Inquirers, did, in fact, complete an application to apply for a
loan. However, this appeal comes from a 12(b)(6) motion to dismiss; the relevant pleading
now before us is the Third Amended Complaint. But the Third Amended Complaint has no
allegations suggesting that they did, in fact, apply. Paragraph 40 of the Complaint, which
plaintiffs’ counsel cited at oral argument, provides no support. Its claim that “Defendants
discriminated against Plaintiffs in their capacity as applicants seeking credit to purchase a
home” is a conclusory allegation; it contains no factual content.
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                                 No. 15-20710
      70.   Because Defendant AmeriPro Funding would not use the
            Section 8 voucher in its loan decision, [the AmeriPro
            Inquirers] . . . could not secure a certain size mortgage. . . .
      In sum, the AmeriPro Inquirers allege that they requested information
regarding mortgages from AmeriPro. The implication is that they did not
apply for loans because they were discouraged from applying because their
Section 8 income would not be considered.
                                       C.
      The third group consists of two plaintiffs—Baylor and Kennerly—the
“Wells Fargo Applicants.”
      The Wells Fargo Applicants did not approach AmeriPro at all. Indeed,
they are not bringing any claims against AmeriPro. Instead, they applied
directly to Wells Fargo in its capacity as a mortgage originator:
      81.   In addition Zachary Baylor and Tracey Kennerly, who
            applied for mortgage loans with Wells Fargo, were
            discriminated against by Wells Fargo’s refusal to consider
            Section 8 income or other public assistance for consideration
            in its mortgage loan decisions on the same basis as non-
            public assistance income. . . .
      94.   Plaintiff Zachary Baylor applied for a mortgage loan in
            approximately 2011 with Defendant Wells Fargo Bank. . . .
      96.   Plaintiff Zachary Baylor’s Section 8 and other public
            assistance income was not considered by Wells Fargo on the
            same basis as non-public assistance income for his mortgage
            application. . . .
      102. Plaintiff Tracey Kennerly applied for a mortgage loan in
           approximately early 2012 with Defendant Wells Fargo
           Bank. . . .
      104. Plaintiff Tracey Kennerly’s Section 8 income was not
           considered on the same basis by Wells Fargo as non-public
           assistance income for consider[ation] of her mortgage
           application.



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                                No. 15-20710
      105. Plaintiff Tracey Kennerly’s down payment housing voucher
           was not included for consideration by Wells Fargo as part of
           her mortgage application. . . .
      109. As a result of her Section 8 income not being considered on
           the same basis as non-public assistance income for the
           purpose of her mortgage application, Tracey Kennerly
           obtained less favorable mortgage terms and qualified for a
           mortgage at a lesser amount than if her Section 8 income
           had been considered equally as non-public assistance
           income. . . .
      In sum, the Wells Fargo Applicants allege that they applied directly for
loans with Wells Fargo and—presumably based on the language in Wells
Fargo’s guidelines for secondary mortgage purchases—claim that their Section
8 income was not considered.
      We now turn to the proceedings before the district court.
                                       II.
      Plaintiffs filed suit in state court, alleging violations of the ECOA.
Defendants removed to federal court on the basis of federal question
jurisdiction. After plaintiffs amended their complaint three times, defendants
moved to dismiss the complaint for failure to state a claim under Federal Rule
of Civil Procedure 12(b)(6).    The district court granted the motion and
dismissed all claims with prejudice.
      First, the district court considered whether the plaintiffs’ claims
plausibly satisfied the elements of the McDonnell Douglas “prima facie case”
for circumstantial evidence in proving a discrimination claim. See Fierros v.
Texas Dep’t of Health, 274 F.3d 187, 191 (5th Cir. 2001), overruled on other
grounds by Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003) (“If the plaintiff
seeks to establish causation by circumstantial evidence, the tripartite burden-
shifting framework of McDonnell Douglas applies.”). The court found that they
did not because plaintiffs failed to allege that they were treated differently
from any similarly situated applicant. Second, the district court considered
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                                     No. 15-20710
whether plaintiffs plausibly alleged enough direct evidence of discrimination
to bypass the McDonnell Douglas framework. See Fierros, 274 F.3d at 192 (“If,
on the other hand, the plaintiff presents direct evidence that the employer’s
motivation for the adverse action was at least in part retaliatory, then the
McDonnell Douglas framework does not apply.”). The district court again
found that they did not. Satisfied that the plaintiffs had not sufficiently pled
either circumstantial or direct evidence of discrimination under the ECOA, the
district court dismissed the complaint for failure to state a claim.
                                           III.
       This court reviews the grant of a motion to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6) de novo. Shanbaum v. United States, 32 F.3d
180, 182 (5th Cir. 1994).
       In order to state a claim, a complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to relief.” Fed. R.
Civ. P. 8(a)(2).
       To state a claim for relief under the ECOA, the plaintiffs must plausibly
show that they were discriminated against in violation of the statute. More
specifically, the complaint must plausibly allege that (1) each plaintiff was an
“applicant”; (2) the defendant was a “creditor”; and (3) the defendant
discriminated against the plaintiff with respect to any aspect of a credit
transaction on the basis of the plaintiff’s membership in a protected class. See
15 U.S.C. §§ 1691(a), 1691a(b), 1691a(e), 1691e(a). 7
      The Supreme Court has clearly explained the standard for evaluating
whether a complaint states a valid claim for relief:




      7  Accord Estate of Davis v. Wells Fargo Bank, 633 F.3d 529, 538 (7th Cir. 2011) (“To
state a claim under the ECOA, Mrs. Davis had to allege that she was an ‘applicant’ and that
the defendants treated her less favorably because of her race.”).
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                                    No. 15-20710
      To survive a motion to dismiss, a complaint must contain sufficient
      factual matter, accepted as true, to state a claim to relief that is
      plausible on its face. A claim has facial plausibility when the
      plaintiff pleads factual content that allows the court to draw the
      reasonable inference that the defendant is liable for the
      misconduct alleged. The plausibility standard is not akin to a
      probability requirement, but it asks for more than a sheer
      possibility that a defendant has acted unlawfully. Where a
      complaint pleads facts that are merely consistent with a
      defendant’s liability, it stops short of the line between possibility
      and plausibility of entitlement to relief. . . .
      [T]he tenet that a court must accept as true all of the allegations
      contained in a complaint is inapplicable to legal conclusions.
      Threadbare recitals of the elements of a cause of action, supported
      by mere conclusory statements, do not suffice. . . . [O]nly a
      complaint that states a plausible claim for relief survives a motion
      to dismiss. . . . [W]here the well-pleaded facts do not permit the
      court to infer more than the mere possibility of misconduct, the
      complaint has alleged—but it has not shown—that the pleader is
      entitled to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009) (citations, quotations, and
alterations omitted).
                                        IV.
      Thus, the question that we are called upon to address is whether the
district court erred in holding that none of the plaintiffs stated a plausible
claim for relief. This consideration requires that we address the question as to
each group of plaintiffs in turn.
                                         A.
      First, we turn to the Wells Fargo Applicants. This “group” includes the
two plaintiffs who applied directly for a loan with Wells Fargo.
      There is no dispute that they are “applicants,” nor that Wells Fargo was
a “creditor” with respect to them. Nevertheless, we find that they did not
plausibly state a claim against Wells Fargo.


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                                  No. 15-20710
      The only fact that these applicants allege to establish that Wells Fargo
illegally refused to consider their Section 8 income is that its guide stated that
it would not purchase mortgages originated by other lenders when based on
Section 8 income.     But the question of Wells Fargo’s purchasing on the
secondary mortgage market is distinct from its practices as an originating
lender. Indeed, the ECOA does not prohibit discrimination with respect to
mortgages purchased on the secondary market; the Act only applies to
originating lenders in the primary market. Thus the facts alleged by the Wells
Fargo applicants have no plausible relation to the statutory injury they assert.
      All of the other allegations that the Wells Fargo Applicants make, see,
e.g., Complaint at ¶¶ 81, 96, 104, 105, 109, above, are not facts and are no more
than “formulaic recitation[s] of the elements of a cause of action.” Iqbal, 556
U.S. at 678–79. In short, such recitations are only hollow support to a plausible
claim that Wells Fargo discriminated against them in their loan applications
on the basis of their Section 8 income.        Accordingly, the district court’s
judgment as to the Wells Fargo Applicants is affirmed.
                                       B.
      Next, we address the claims of the six AmeriPro Inquirers, who sought
information from AmeriPro but did not apply for a loan.
      As we have earlier noted, the ECOA provides that “[i]t shall be unlawful
for any creditor to discriminate against any applicant, with respect to any
aspect of a credit transaction . . . because all or part of the applicant’s income
derives from any public assistance program.” 15 U.S.C. § 1691(a)(2). One
remedy for such discrimination is a civil cause of action, providing that “[a]ny
creditor who fails to comply with any requirement imposed under this
subchapter shall be liable to the aggrieved applicant.” 15 U.S.C. § 1691e(a)
(emphasis added). “Applicant” is defined as “any person who applies to a
creditor directly for an extension, renewal, or continuation of credit, or applies
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                                       No. 15-20710
to a creditor indirectly by use of an existing credit plan for an amount exceeding
a previously established credit limit.” 15 U.S.C. § 1691a(b). 8
       “There is nothing ambiguous about ‘applicant.’” Moran Foods, Inc. v.
Mid-Atl. Mkt. Dev. Co., LLC, 476 F.3d 436, 441 (7th Cir. 2007). “To ‘apply’
means ‘to make an appeal or request especially formally and often in writing
and usually for something of benefit to oneself.’ Thus, the plain language of
the ECOA unmistakably provides that a person is an applicant only if she
requests credit.” Hawkins v. Cmty. Bank of Raymore, 761 F.3d 937, 941 (8th
Cir. 2014) (citing Webster’s Third New International Dictionary 105 (2002))
(alterations omitted), aff’d by an equally divided Court, 136 S. Ct. 1072 (2016). 9
       The AmeriPro Inquirers’ claims fail because, after filing a Third
Amended Complaint, they do not plausibly allege that they “applie[d]” for a
loan or otherwise requested credit.              Nor do they identify any AmeriPro
personnel with whom they may have had any conversation. They allege only
that they “contacted and made inquiry . . . as to financing a home,” and that
they “contacted Defendant AmeriPro Funding during various months of the
calendar years 2011 to and including 2014.” Complaint ¶¶ 62–63. These are
the only allegations, broad and unspecific as they are, that the AmeriPro
Inquirers make that are not conclusions and formulaic recitations of the



       8 Further, “creditor” is defined as “any person who regularly extends, renews, or
continues credit; any person who regularly arranges for the extension, renewal, or
continuation of credit; or any assignee of an original creditor who participates in the decision
to extend, renew, or continue credit.” 15 U.S.C. § 1691a(e).

       9 Some courts have found that “applicant” is ambiguous with respect to whether the
term covers a guarantor. See, e.g., RL BB Acquisition, LLC v. Bridgemill Commons Dev.
Grp., LLC, 754 F.3d 380, 384–85 (6th Cir. 2014). We need not decide whether the term
includes a guarantor, or whether we ought to defer to Regulation B’s definition of the term,
which, unlike the statute, explicitly includes guarantors, and which, unlike the statute,
includes those who “request[ ]” credit. See 12 C.F.R. § 202.2(e). We are satisfied that the
term “applicant” does not include individuals who are not guarantors and who never request
credit at all.
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                                        No. 15-20710
elements of the claim. 10 Such allegations are insufficient plausibly to show
that they “applied” for credit. Not only do the allegations fail to show that the
AmeriPro Inquirers made an application for a loan, they fail to show that the
AmeriPro Inquirers “request[ed] credit” at all. Hawkins, 761 F.3d at 941; cf.
The American Heritage Dictionary of the English Language 678 (1981)
(defining “inquire” as “To put a question,” “To request information,” “To make
an inquiry; look into; investigate,” “To ask about,” or “To ask”); see also 76 Fed.
Reg. 79,442, 79,472 (2011) (listing “[e]xamples of inquiries that are not
applications”).
       Plaintiffs cite Moore v. United States Department of Agriculture on
Behalf of Farmers Home Administration, 993 F.2d 1222 (5th Cir. 1993), for the
proposition that plaintiffs need not complete an application in order to be
considered “applicants.” There, the court reversed a district court’s holding
that a white applicant—who was denied credit on the basis that a program
categorically excluded whites—did not have standing because he failed to
complete his application. Id. at 1222–24. Moore’s submitted application was
incomplete because he failed to fill in the application’s form indicating “the
minority you represent.” Id. at 1223 n. 2. Thus, unlike here, Moore actually
submitted an application, and he actually requested credit. The AmeriPro
Inquirers, by contrast, have only alleged that they sought information about
credit.


       10  For example, the AmeriPro Inquirers allege that “[i]n addition to the foregoing
allegations, Plaintiffs . . . also specifically requested financing and/or credit from Defendant
AmeriPro Funding through various employees, agents and servants.” Complaint ¶ 61. This
non-specific, conclusory allegation, standing alone and unsupported by any other factual
content, tells us nothing and is insufficient to survive a motion to dismiss. Although plaintiffs
claim that they “specifically requested financing and/or credit,” they (unlike the AmeriPro
Applicants) offer nothing to support this bald assertion, and instead go on to state only that
they “inquired” about loans. Additionally, they later allege that they were “denied credit and
financing,” Complaint ¶ 69, but this allegation is unsupported and implausible in the light of
their failure to allege that they ever applied for, or otherwise requested, credit.
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                                    No. 15-20710
      Plaintiffs also counter that even if they did not actually apply, they failed
to apply only because they were “discouraged” from applying. It is true that a
regulation pertinent to the ECOA, known as “Regulation B,” provides that “[a]
creditor shall not make any oral or written statement, in advertising or
otherwise, to applicants or prospective applicants that would discourage on a
prohibited basis a reasonable person from making or pursuing an application.”
12 C.F.R. § 202.4(b). But § 202.4(b) does not alter the definition of “applicant,”
and only an “aggrieved applicant” has standing under the ECOA to bring a
private cause of action. 15 U.S.C. § 1691e. The statute provides no cause of
action for an “aggrieved prospective applicant.”                Discouragement of a
“prospective applicant” may be regulatorily prohibited, but it cannot form the
basis of a private claim or cause of action under the ECOA. 11
      Because the AmeriPro Inquirers have not alleged a plausible factual
basis to show that they were “applicants” under the ECOA, they fail to state a
claim.     We thus affirm the district court’s judgment as to the AmeriPro
Inquirers.
                                           C.
      Third, we consider the claims of the four AmeriPro Applicants, who
applied for loans with AmeriPro.           We first address their claims against
AmeriPro, and then address their claims against Wells Fargo.
                                           1.
      The AmeriPro Applicants each specifically allege that they filled out a
loan application with AmeriPro. Thus, under the ECOA, they are “applicants”
to AmeriPro.      The only disputed issue concerning their claims against




      11 Administrative agencies have broader enforcement powers under the ECOA than
individuals attempting to bring a private cause of action. See 15 U.S.C. §§ 1691c, 1691e.
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                                      No. 15-20710
AmeriPro is whether they sufficiently alleged that AmeriPro violated the
ECOA by discriminating against them based on their Section 8 income.
       The AmeriPro Applicants each allege that they were “denied credit and
financing” because AmeriPro “claims it did not have an investor that would
purchase a loan that allowed for their Section 8 income to be utilized in
calculating the debt to income ratio and for qualifying purposes.” Complaint
¶ 69. Thus they allege that an unidentified AmeriPro agent or employee told
them that something was unacceptable about their Section 8 income because
AmeriPro could not sell mortgages based on such income.                    Further, Tina
Alexander alleges specifically that she was “told that her Section 8 income
would not qualify as income on her mortgage application.” Complaint ¶ 84.
       These allegations, taken together, are sufficient plausibly to show that
the Applicants applied for a mortgage with AmeriPro, that AmeriPro refused
to consider their Section 8 income in assessing their creditworthiness, and
that, as a result, they received mortgage loans on less favorable terms and in
lesser amounts than they would have received had their Section 8 income been
considered. 12 The alleged conduct is “discriminat[ion] . . . with respect to any
aspect of a credit transaction . . . because all or part of the applicant’s income
derives from any public assistance program,” 15 U.S.C. § 1691(a)(2), and that
is all that is required to state a claim for relief.
       We therefore hold that the AmeriPro Applicants have stated a claim
against AmeriPro. We reverse the district court’s judgment as to these claims
and remand for further proceedings.



       12 The Applicants’ allegations “allow[ ] the court to draw the reasonable inference,”
Iqbal, 556 U.S. at 678–79, that they received mortgages on less favorable terms than if their
Section 8 income had been considered. Based on common sense alone, it is plausible, if not
likely or even certain, that an applicant able to list Section 8 income would receive more
favorable terms—better rates, higher lending limits, etc.—than the same applicant would
without listing the income.
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                                 No. 15-20710
                                       2.
      The AmeriPro Applicants also assert claims against Wells Fargo. They
argue that since Wells Fargo’s secondary-market policy of refusing to purchase
mortgages that rely on Section 8 income determined AmeriPro’s primary-
market policy of discriminating against applicants with Section 8 income,
Wells Fargo should also be liable for violating the ECOA. We cannot agree,
however, that these allegations state a cognizable cause of action under the
statute against Wells Fargo as a player in the secondary market.
      The primary issue is whether Wells Fargo is a “creditor” as to the
AmeriPro Applicants.     The ECOA defines “creditor” as “any person who
regularly extends, renews, or continues credit; any person who regularly
arranges for the extension, renewal, or continuation of credit; or any assignee
of an original creditor who participates in the decision to extend, renew, or
continue credit.”   15 U.S.C. § 1691a(e).     Relevant too is the definition of
“applicant”: “any person who applies to a creditor directly for an extension,
renewal, or continuation of credit, or applies to a creditor indirectly by use of
an existing credit plan for an amount exceeding a previously established credit
limit.” 15 U.S.C. § 1691a(b). The AmeriPro Applicants do not allege that they
applied either “directly” or “indirectly” to Wells Fargo; they applied to
AmeriPro. Wells Fargo, then, can only be held liable as a creditor as to the
AmeriPro Applicants if it was an “assignee of an original creditor who
participates in the decision to extend, renew, or continue credit.” 15 U.S.C.
§ 1691a(e).
      The AmeriPro Applicants fail to state a claim against Wells Fargo
because they fail plausibly to allege that Wells Fargo “participate[d]” in the
decision to extend credit. They make no allegations whatsoever concerning
Wells Fargo’s alleged “participation” other than pointing out that Wells Fargo
had a policy in the secondary market of not purchasing mortgages that were
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                                   No. 15-20710
originated by someone else in the primary market based on Section 8 income.
Again, this policy does not violate any prohibition under the ECOA. The ECOA
does not apply, and does not purport to apply, to arms-length transactions in
the secondary mortgage market. But the AmeriPro Applicants allege only that
AmeriPro was a seller in the secondary market, that Wells Fargo was a
purchaser of AmeriPro’s mortgages, and that Wells Fargo’s publicly-available
purchasing guidelines excluded mortgages that implicate Section 8 housing
vouchers. There is no allegation that Wells Fargo had any “participation”
whatsoever in AmeriPro’s decision to extend credit to any of its applicants. 13
Cf. The American Heritage Dictionary of the English Language 955 (1981)
(defining “participate” as “To take part; join or share with others”); Webster’s
Third New International Dictionary of the English Language Unabridged 1646
(1993) (defining “participate,” in relevant part, as “to take part in something
(as an enterprise or activity) usu[ally] in common with others”).
      The Consumer Financial Protection Bureau (“CFPB”), as amicus, argues
that the ECOA’s and Regulation B’s definitions of “creditor” are broad enough
to encompass Wells Fargo’s conduct. See 12 C.F.R. § 202.2(l) (“Creditor means
a person who, in the ordinary course of business, regularly participates in a
credit decision, including setting the terms of the credit. The term creditor
includes a creditor’s assignee, transferee, or subrogee who so participates.”);
12 C.F.R. Pt. 1002, Supp. I ¶ 1002.2(l)(1), 76 Fed. Reg. 79,442, 79,473 (2011)
(“The term creditor includes all persons participating in the credit decision.
This may include an assignee or a potential purchaser of the obligation who
influences the credit decision by indicating whether or not it will purchase the
obligation if the transaction is consummated.”).         But even Regulation B’s



      13 To the extent the Complaint attempts to insinuate as much, it does so through
conclusory allegations that are not entitled to any presumption of truth.
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                                      No. 15-20710
definition of “creditor” does not purport to extend to those who have no direct
involvement whatsoever in an individual credit decision. See 68 Fed. Reg.
13,144, 13,145 (2003) (“The final rule clarifies that the definition of creditor
includes those who make the decision to deny or extend credit, as well as those
who negotiate and set the terms of the credit with the consumer.                     But a
potential assignee who establishes underwriting guidelines for its purchases
but does not influence individual credit decisions is not a creditor.”) (emphasis
added); 14 accord In re Simmerman, 463 B.R. 47, 63 (Bankr. S.D. Ohio 2011)
(“[A]n assignee may only be held liable as a ‘creditor’ when the assignee
influences the credit decision by, for example, participating in the decision to
extend credit or by negotiating the terms of the credit. Without being involved
in or influencing the credit decision, the assignee will not be held liable as a
creditor under the ECOA.”).
       In sum, we reject the broad expansion of ECOA liability urged by the
AmeriPro Applicants and the amicus CFPB to include the conduct of Wells
Fargo in the secondary market.
                                             V.
       We sum up: the “Wells Fargo Applicants”—plaintiffs Baylor and
Kennerly—do not plausibly allege that Wells Fargo discriminated against
them on the basis of their Section 8 income or failed to consider their Section
8 income in assessing their creditworthiness. The “AmeriPro Inquirers”—
plaintiffs Alexis, Baines, Bennings, Haygood, Henry, and R. Jones—do not
plausibly allege that they are “applicants” under the ECOA because they did
not actually apply for credit with AmeriPro. The claims of the “AmeriPro



       14 The 2011 guidelines, though arguably broader than the 2003 guidelines, were
careful to note that “this interim final rule does not impose any new substantive obligations
on regulated entities.” 76 Fed. Reg. at 79,442.

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                                  No. 15-20710
Applicants”—plaintiffs Alexander, C. Jones, Williams, and Woods—as against
Wells Fargo do not plausibly allege that Wells Fargo was a “creditor” with
respect to them. The district court’s dismissal is affirmed as to these claims.
      The claims of the “AmeriPro Applicants” as against AmeriPro, however,
do plausibly allege violations of the ECOA. These plaintiffs have plausibly
alleged that AmeriPro refused to consider their Section 8 income in assessing
their creditworthiness as mortgage applicants, and that they received
mortgages on less favorable terms and in lesser amounts than they would have
had their Section 8 income been considered. We reverse the district court’s
judgment as to these claims, and remand for further proceedings not
inconsistent with this opinion.
      The district court’s judgment is therefore AFFIRMED IN PART and
REVERSED IN PART, and the case is REMANDED for further proceedings in
accordance with this opinion.




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