A Pennsylvania appeals court ruled Friday that predatory mortgage loans targeting African-American home buyers can constitute housing discrimination under the Pennsylvania Human Relations Act, Associated Press reported.

Last Oct. 26, the state Human Relations Commission ruled against brokers McGlawn & McGlawn Inc. and company co-founder Reginald McGlawn of Elkins Park, Pa., AP reported.

At that time, the commission assessed a total of nearly $910,000 in damages and fines, including $700,000 in actual damages, a $25,000 civil penalty and $185,000 for embarrassment and humiliation, press reports said.

The commission at that time directed McGlawn & McGlawn to make repayments to the 10 customers, making up the difference between the rates they were charged and the prevailing market rates at the time, AP reported.

The three-judge Commonwealth Court panel Friday said the Human Relations Commission had the authority to assess the damages, but said the $700,000, based on a 5 percent interest rate, must be recalculated to take into account whether the borrowers would have qualified for that rate, according to AP.

McGlawn & McGlawn advertised aggressively in the Philadelphia market, concentrating on black radio and in black newspapers, reports said, and 65 of 66 mortgage applications in which the borrower’s race was identified involved African-American customers, according to the ruling.

Pennsylvania Human Relations Commission attorney Charles L. Nier III said mortgage companies and financial institutions have previously been found in violation of anti-discrimination laws, but the McGlawn case was an apparent first in the country involving a mortgage broker, AP reported.

“This goes a long way to vindicating the commonwealth’s interest in eradicating unlawful discrimination,” Nier told AP.

Judge Robert Simpson wrote in a 38-page opinion that the brokers had lent more than applicants asked for, discouraged cancellations within three days of obtaining the loans, falsified documents to reflect more than actual assets and disregarded the borrowers’ ability to repay, reports said.

“These types of loans do not serve the borrower’s wants or needs,” Simpson wrote, according to reports.

McGlawn lawyer Jeffry Homel told AP he welcomed the order to recalculate the damages, but said the commission acted outside the scope of its authority.

“So anything beyond that is disappointing,” he said, according to reports.

A number of lending practices can be defined as “predatory,” but the McGlawn case centered on allegations of “reverse redlining,” in which credit is extended on unfair terms in geographic areas based on income, race or ethnicity, reports said.

The commission said the company arranged loans with high interest rates, prepayment penalties and balloon payments; charged high fees, some undisclosed; used high-pressure sales tactics; and didn’t fully disclose details of the loans, AP reported.

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