Redlining is defined as which of the following?

• A. A policy to ensure equal lending across all neighborhoods.
• B. A government program to identify high risk investments in rural areas.
• C. The illegal discriminatory practice of banks, insurance companies, and other financial institutions refusing or limiting loans, mortgages, or insurance within specific geographic areas, especially inner-city neighborhoods.
• D. A voluntary program to improve neighborhood ratings by color coding maps.

Answer: (C)

Redlining is an illegal discriminatory practice where lenders, insurers, and other financial institutions refuse or limit loans, mortgages, or insurance within specific geographic areas, especially inner-city neighborhoods, based on the characteristics of the residents rather than individual creditworthiness. This term comes from historical color-coded maps where red-lined areas were deemed high risk, leading to systematic denial of financial services to those communities. It violates federal fair housing and fair lending laws, such as the Fair Housing Act and the Equal Credit Opportunity Act, which prohibit discrimination in housing and credit decisions based on protected characteristics and geography. The practice contributed to disinvestment and entrenched wealth gaps in affected areas.

The other descriptions describe outcomes or programs that do not match redlining: it is not a policy to ensure equal lending, not a government program identifying high-risk rural investments, and not a voluntary effort to color-code maps for neighborhood improvement.