Fair Housing
Under the Fair Housing Act, a lender who denies a mortgage application based on the racial composition of the neighborhood where the property is located is committing:
ASteering
BRedlining✓ Correct
CBlockbusting
DChurning
Explanation
Redlining is the practice of denying financial services (loans, insurance) to properties in neighborhoods based on their racial or ethnic composition rather than the creditworthiness of the applicant. Redlining violates ECOA, the Fair Housing Act, and CRA requirements.
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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.
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