Fair HousingIntermediateCalifornia Exam

Redlining refers to the illegal practice of:

AMarking property boundaries on plat maps, per standard fair housing compliance practice

BDenying mortgage loans or insurance to residents of certain neighborhoods based on race or ethnicityCorrect

CRequiring a minimum credit score for all loan applicants, under federal and California fair housing law

DZoning residential areas for single-family use only, as defined under the Fair Employment and Housing Act

Why Denying mortgage loans or insurance to residents of certain neighborhoods based on race or ethnicity Is Correct

Answer B: Denying mortgage loans or insurance to residents of certain neighborhoods based on race or ethnicity

Redlining was the practice by banks and insurers of refusing loans or coverage to residents of minority neighborhoods, literally drawn in red on maps. It is prohibited under the Fair Housing Act and the Community Reinvestment Act.

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

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

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.

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.

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.

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Key Terms to Know