The illegal and discriminatory practice of banks, insurance companies, and other financial institutions refusing to lend or do business in inner-city neighborhoods is known as?

• A. Steering
• B. Redlining
• C. Blockbusting
• D. Predatory lending

Answer: (B)

Redlining is the discriminatory practice where financial institutions refuse to lend or do business in entire neighborhoods, typically based on racial or economic composition rather than individual creditworthiness. The term comes from the historical habit of drawing red lines on maps around certain areas to mark them as off-limits for mortgages and other financing. This shuts out residents of those communities from opportunities to buy homes, access loans, or obtain insurance, which in turn fuels disinvestment and decline in property values.

This concept is distinguished from other discriminatory tactics. Steering involves directing borrowers toward or away from certain areas based on protected characteristics, rather than a blanket geographic denial. Blockbusting means exploiting fears of demographic change to spur sales, not the wholesale denial of services in a neighborhood. Predatory lending refers to unfair or abusive loan terms offered to borrowers, not the practice of denying services to a locale. Understanding redlining helps connect how location-based discrimination harms communities and violates fair housing and lending laws.