XYZ Mortgage Company's practice of not lending in a designated area is best described as which term?

• A. Steering
• B. Blockbusting
• C. Mortgage discrimination
• D. Redlining

Answer: (D)

Denying loans or other financial services in a specific area is redlining. This practice involves a lender or financial institution refusing to provide mortgages or limiting credit in a neighborhood, often based on the area's racial or ethnic makeup rather than individual creditworthiness. It’s typically associated with visualizing the area on a map and drawing lines around neighborhoods where services won’t be offered. Redlining undermines access to homeownership and is illegal under federal fair lending laws. It’s a form of mortgage discrimination, but the precise term for this particular behavior is redlining. Steering would involve directing buyers to or away from neighborhoods, and blockbusting involves exploiting fears of demographic change to prompt sales, which are different behaviors.