Which term describes the illegal practice of denying mortgage lending or insurance coverage to certain geographic areas?

Which term describes the illegal practice of denying mortgage lending or insurance coverage to certain geographic areas?

• A. Baiting
• B. Redlining
• C. Phishing
• D. Blockbusting

Answer: (B)

Redlining describes the illegal practice of denying mortgage lending or insurance coverage to people in specific geographic areas, often based on the area’s racial or socioeconomic makeup. Banks historically drew lines on maps to avoid investing in certain neighborhoods, which starved those communities of credit and services. This is prohibited by fair lending and fair housing laws, which require lenders to meet the credit needs of all communities, with enforcement supported by laws like the Community Reinvestment Act. Other terms relate to different tactics (baiting or phishing as fraud, blockbusting as manipulating property sales) and don’t capture the specific geographic denial of credit as accurately as redlining.

Redlining describes the illegal practice of denying mortgage lending or insurance coverage to people in specific geographic areas, often based on the area’s racial or socioeconomic makeup. Banks historically drew lines on maps to avoid investing in certain neighborhoods, which starved those communities of credit and services. This is prohibited by fair lending and fair housing laws, which require lenders to meet the credit needs of all communities, with enforcement supported by laws like the Community Reinvestment Act. Other terms relate to different tactics (baiting or phishing as fraud, blockbusting as manipulating property sales) and don’t capture the specific geographic denial of credit as accurately as redlining.