McGlawn v. Pa. Human Rels. Comm'n - 891 A.2d 757 (Pa. Commw. Ct. 2006)

Rule:

Reverse redlining is a recognized form of housing discrimination. Section 5(h) of the Pennsylvania Human Relations Act, 43 Pa. Stat. Ann. § 955(h) (1955), addresses housing discrimination. Section 5(h)(4), the loan provision, prohibits discrimination against any person in the terms and conditions of any loan of money, whether or not secured by mortgage or otherwise for the acquisition, construction, rehabilitation, repair or maintenance of housing accommodations. § 955(h)(4). Section 5(h)(8)(i), the real estate transaction provision, makes it unlawful for a business engaged in real estate-related transactions to discriminate in the terms and conditions of those transactions.

Facts:

Respondent McGlawn and McGlawn, Inc. (Broker) a state-licensed mortgage broker, and Respondent Reginald McGlawn (Reginald McGlawn) petition for review of the decision of the Pennsylvania Human Relations Commission (Commission). The decision held Respondents violated Sections 5(h)(4)(loan provision) and 5(h)(8)(i)(real estate transaction provision) of the Pennsylvania Human Relations Act (Act) by discriminating against Complainants and other similar situated persons (collectively, Complainants), in mortgage loan transactions, because of their race and the racial composition of their neighborhoods. The Commission's final order directed Respondents to (1) cease and desist from discriminating against African Americans because of their race; (2) pay Complainants actual damages; (3) pay Complainants damages for embarrassment and humiliation; and (4) pay a civil penalty of $ 25,000.00. Further, the Commission's order directed Broker to (5) provide employee training to its employees designed to educate them in their responsibility to treat clients in a non-discriminatory manner consistent with the provisions of the Act; and to (6) develop and implement a record-keeping system designed to accurately record information about Broker's charges in all mortgage transactions. The order also required Respondents to report the means of compliance and directed the Commission to contact the Department of Banking so that it may take such licensing action as it deemed appropriate.

Issue:

Did the Act extend to a mortgage broker's predatory lending activities known as "reverse redlining"?

Answer:

Yes

Conclusion:

The court upheld the Commission's determination that a cause of action for reverse redlining existed under the Act and, therefore, the Commission had the jurisdiction and authority to address the claim. The court further upheld the finding that respondents engaged in reverse redlining by including high interest rates, additional fees, pre-payment penalties, balloon payments, and other characteristics in their transactions. The court did find error with regard to the actual damage awards because the interest rate calculation time frame was unclear and the Commission did not take into account complainants' credit ratings.