## Facts

- McGlawn & McGlawn, Inc., a state-licensed mortgage broker founded and run by Reginald and Anthony McGlawn, arranged mortgage loans and specialized in sub-prime lending.
- Between roughly 1998 and 2000, the broker arranged sub-prime loans for Black property owners in Philadelphia County.
- Two borrowers filed administrative complaints alleging they were targeted for predatory loans and subjected to discriminatory loan terms because of race and the racial composition of their neighborhoods.
- After investigation and a hearing, the Pennsylvania Human Relations Commission found that Reginald McGlawn and the broker engaged in “reverse redlining,” meaning the extension of credit on unfair terms to communities historically subject to redlining.
- The Commission concluded the conduct violated PHRA §§ 5(h)(4) (credit/loan discrimination) and 5(h)(8)(i) (real-estate-related transaction discrimination).
- The Commission ordered cease-and-desist relief, actual damages, damages for embarrassment and humiliation, a $25,000 civil penalty, employee training, and implementation of mortgage-transaction recordkeeping.
- McGlawn and the broker petitioned for judicial review, challenging liability and the damages award.

## Issues

1. Whether the Pennsylvania Human Relations Act prohibits “reverse redlining” by a mortgage broker as discrimination in mortgage lending and related real estate transactions based on race and neighborhood racial composition.
2. Whether the Commission exceeded its authority by recognizing reverse redlining as actionable under the PHRA.
3. Whether substantial evidence supported the Commission’s finding that petitioners engaged in race-based reverse redlining.
4. Whether the Commission’s actual-damages award was supported by the record and legally proper.

## Decision

- The court held the PHRA extends to and prohibits reverse redlining in mortgage loan transactions.
- The court affirmed the Commission’s determination that petitioners violated PHRA §§ 5(h)(4) and 5(h)(8)(i) by discriminating against African-American borrowers (and similarly situated persons) in the terms and conditions of mortgage loans.
- The court affirmed the Commission’s non-monetary relief (including cease-and-desist, training, and recordkeeping requirements) and did not disturb the civil penalty and humiliation damages.
- The court vacated part of the award of actual damages and remanded to the Commission for further proceedings limited to the actual-damages component.

## Legal Principles

- Discrimination in housing-related credit under the PHRA includes not only denial of credit (redlining) but also extension of credit on unfair or predatory terms (reverse redlining) when motivated by race or the racial composition of a neighborhood.
- The PHRA’s remedial provisions covering discriminatory terms and conditions in lending and real-estate-related transactions reach predatory lending practices when tied to prohibited classifications.
- The Commission may look to analogous federal fair-housing precedent when interpreting the PHRA’s prohibitions in housing-credit contexts.
- On judicial review, the Commission’s factual findings are upheld if supported by substantial evidence.
- Remedial orders must be supported by the evidentiary record; where actual damages are inadequately supported or require clarification, the proper remedy is partial vacatur and remand as to damages.

## Conclusion

The Commonwealth Court confirmed that the PHRA prohibits race-based reverse redlining by mortgage brokers, upheld the Commission’s liability findings and most remedial directives, but vacated and remanded part of the actual-damages award for further proceedings.


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