In appraisal bias discussions, the term 'formerly redlined community' refers to a neighborhood that was historically denied mortgage financing.

• A. A neighborhood that historically faced discrimination in lending
• B. A neighborhood that historically was denied mortgage financing
• C. A neighborhood with the highest property values
• D. A neighborhood with no prior investment

Answer: (B)

Redlining was a historical practice where lenders denied or restricted mortgage financing in specific neighborhoods, typically based on the area's racial or ethnic composition. A formerly redlined community, then, is a neighborhood that was historically denied mortgage financing. This directly captures the defining feature of redlining and why the term is used.

The other descriptions don’t define redlining as precisely. Discrimination in lending covers a broader idea, but redlining specifically refers to denying mortgage financing based on location. Describing a neighborhood with the highest property values or with no prior investment doesn’t reflect the focused lending denial that redlining signifies.