Finance
In New Mexico, 'redlining' in mortgage lending refers to the illegal practice of:
AOffering preferential rates to certain buyers
BRefusing to make loans or offering unfavorable terms based on the racial or ethnic composition of a neighborhood✓ Correct
CRequiring large down payments for investment properties
DSetting interest rates above market rate
Explanation
Redlining is the illegal practice of refusing to provide financial services (or charging more) based on the racial or ethnic composition of a neighborhood, violating the Fair Housing Act and Equal Credit Opportunity Act.
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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.
Fair Housing ActFederal law prohibiting discrimination in the sale, rental, or financing of housing based on race, color, national origin, religion, sex, disability, and familial status.
Adjustable-Rate Mortgage (ARM)A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
Math Concepts
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