A mortgage broker in a large metropolitan area refuses to take applications on inner-city properties and refers those applicants to another broker in the area. Which statement is TRUE regarding this broker's policy?

• A. The broker is potentially engaging in redlining
• B. The broker is potentially engaging in steering
• C. The broker is following fair lending practices
• D. The broker is violating advertising guidelines

Answer: (A)

Redlining is the practice of denying or limiting lending services in specific geographic areas, often based on the neighborhood’s perceived characteristics rather than an individual borrower’s qualifications. Refusing to take applications for inner-city properties and referring those applicants to another broker is a clear example, because access to mortgage services is being withheld from a particular area. This geographic discrimination runs afoul of fair lending laws, which prohibit denying or limiting credit based on location tied to protected characteristics or the area’s demographics. Steering, by contrast, would involve directing borrowers toward or away from certain neighborhoods; here, the issue is the denial of service in that area rather than actively guiding the borrower’s choice. Advertising guidelines aren’t implicated in this scenario.