Fair Housing
A mortgage lender who charges higher interest rates to borrowers in certain zip codes regardless of creditworthiness may be engaging in:
ABlockbusting
BRedlining✓ Correct
CSteering
DChurning
Explanation
Charging higher rates based on geographic area (particularly if correlated with race or national origin) is a modern form of redlining — geographic-based lending discrimination — which violates the Fair Housing Act and ECOA.
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Key Terms to Know
Fair Housing Act
Federal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
SteeringAn 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.
Math Concepts
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