What is the practice called when lenders refuse to offer loans based on the racial composition of specific neighborhoods?

The practice known as redlining refers specifically to the refusal of lenders to provide loans or insurance in certain neighborhoods, which are often identified based on racial or ethnic composition. This discriminatory practice emerged from policies and practices within the finance and real estate industries that effectively marginalized communities predominantly inhabited by minority groups.

Redlining is named after the red ink or line that was drawn on maps to delineate areas deemed too risky for lending, which predominantly affected African American neighborhoods and other minority communities. This led to systemic disinvestment, reduced access to housing and financial services, and long-term socio-economic disadvantages for those communities impacted by these decisions.

Other terms like blockbusting or steering pertain to different practices within real estate but do not specifically refer to the refusal of loans based on neighborhood racial composition. Blockbusting involves inducing homeowners to sell their properties under the pretense that racial change in the neighborhood will cause property values to fall, while steering is about directing prospective buyers towards or away from certain neighborhoods based on race. Discrimination is a broader term encompassing various unfair practices but does not specifically identify the practice of lenders selectively denying loans based on neighborhood demographics.