Fair HousingIntermediateArizona Exam

Redlining in real estate refers to:

AThe legitimate real estate practice of marking property boundaries on a map using a colored line to indicate the geographic extent of a proposed subdivision plat

BThe illegal practice of refusing loans or insurance in certain geographic areas based on racial compositionCorrect

CUsing red ink to circle or highlight known defects on the Seller's Property Disclosure Statement so the buyer can easily identify areas of concern during review

DRequiring a red-line boundary survey prepared by a licensed Arizona surveyor as a condition of closing to confirm the property's legal description and boundary accuracy

Why The illegal practice of refusing loans or insurance in certain geographic areas based on racial composition Is Correct

Answer B: The illegal practice of refusing loans or insurance in certain geographic areas based on racial composition

Redlining is the illegal practice by lenders, insurers, or real estate professionals of refusing to provide services in certain geographic areas based on the racial or ethnic composition of the neighborhood.

Exam Tip: Fair Housing

Fair Housing questions test both federal (Fair Housing Act of 1968) and state-level protected classes. The federal protected classes are race, color, religion, national origin, sex, familial status, and disability. Many states add additional protections.

Key Fair Housing Terms in This Question

Redlining

An 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.

People Also Study

Key Terms to Know

Redlining

An 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.

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.

Blockbusting

An 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.