Fair Housing
A lender who refuses to make mortgage loans in a specific geographic area due to the racial composition of the neighborhood is engaging in:
APredatory lending
BSteering
CRedlining✓ Correct
DBlockbusting
Explanation
Redlining is the illegal practice of refusing to make loans or provide insurance in certain geographic areas based on the racial or ethnic composition of the neighborhood.
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Key Terms to Know
Steering
An illegal practice where a real estate agent directs buyers toward or away from certain neighborhoods based on the buyer's race, religion, national origin, or other protected characteristics.
RedliningAn illegal practice where lenders or insurers deny services or charge higher rates in certain neighborhoods based on the racial or ethnic composition of those areas.
BlockbustingAn illegal practice of inducing homeowners to sell by claiming that the entry of minority groups will lower property values.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
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