Fair Housing
What is 'redlining' and why is it illegal under the Fair Housing Act?
AMarking property boundaries in red on surveys; it is legal
BThe practice of denying credit, insurance, or services to residents of certain geographic areas based on the racial or ethnic composition of those areas✓ Correct
CMarking properties in red to indicate foreclosure status
DA legitimate risk management tool for lenders
Explanation
Redlining is the illegal practice of denying financial services (mortgages, insurance) to entire neighborhoods based on racial or ethnic composition rather than individual creditworthiness. Named after the literal practice of drawing red lines around minority neighborhoods on maps.
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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.
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.
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.
BlockbustingAn illegal practice of inducing homeowners to sell by claiming that the entry of minority groups will lower property values.
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