law
redlining
Redlining is the illegal practice of refusing to make loans, offering worse loan terms, or denying insurance in certain neighborhoods based on the racial, ethnic, or other protected makeup of the area rather than on the applicant's qualifications. It is prohibited by the Fair Housing Act and related lending laws. The Community Reinvestment Act was passed partly to encourage lenders to serve all neighborhoods in their markets.
- Exam tip
- Know the trio: redlining is done by lenders and insurers, steering by agents, and blockbusting by those who induce panic selling. Exams often ask you to match each practice to the actor.
- Example
- A bank refuses all mortgage applications from one zip code because most residents are members of a minority group, regardless of their credit. That is redlining.
Related terms & state variants
Sources
Source verification pending. Confirm current requirements with your state regulator.
Last verified: 2026-10-23