Fair Housing

A West Virginia lender who offers FHA loans only to borrowers in certain zip codes (excluding minority-majority neighborhoods) is practicing:

AEffective loan product targeting
BRedlining — geographic credit discrimination based on neighborhood racial composition✓ Correct
CLegitimate risk management by avoiding flood-prone areas
DCompliance with FHA loan limits for certain areas

Explanation

Offering loan products only in selected geographic areas while excluding areas based on racial composition is redlining — an illegal form of credit discrimination prohibited by the Fair Housing Act, ECOA, and the Community Reinvestment Act.

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