Final answer:
Redlining is the discriminatory practice by financial institutions of denying or limiting mortgages in certain neighborhoods, usually based on racial demographics, leading to lasting economic and social disparities.
Step-by-step explanation:
The practice of financial institutions refusing to lend money for housing mortgages for entire neighborhoods is called redlining. This discriminatory practice typically targeted neighborhoods based on racial demographics, marking them as high credit risks, often regardless of individual creditworthiness. Redlining effectively denies people, especially those from racial and ethnic minorities, the opportunity to improve their circumstances through home ownership, contributing to economic disparities and social inequalities. It was once sanctioned by official policies like those of the Federal Housing Administration (FHA), which refused to back loans in minority neighborhoods, affirming segregation. Over time, redlining has had a lasting impact, evident in the persistent educational and financial divides across many American cities.