Question

A bank refusal to loan in a run down minority neighborhood is known as?

a. Redlining
b. blockbusting
c. steering
d. lender preference

Answer 1

The correct option is a. Redlining

Redlining is the practice of denying or charging more for services like loans or insurance in certain neighborhoods based on race. It has had long-term impacts on minority communities, contributing to wealth and opportunity gaps.

Step-by-step explanation:

A bank's refusal to loan in a run down minority neighborhood is known as redlining. This discriminatory practice involves banks and other financial institutions denying or increasing the cost of services, such as loans or insurance, to residents in particular neighborhoods based on racial demographics, rather than individual creditworthiness.

The term 'redlining' stems from the historical practice where lenders would use a red line on maps to demarcate areas deemed too hazardous for investment because of the racial makeup of the residents. Despite the Fair Housing Act of 1968 outlawing this practice, the effects of redlining are still evident today, perpetuating educational and financial divides, and impacting the generational wealth of minority communities.

Answer 2

Refusing to provide a loan in a deteriorated minority neighborhood is termed as "redlining," a discriminatory lending practice based on the neighborhood's characteristics, often tied to its racial or ethnic composition.
The correct answer is option a. Redlining.

Step-by-step explanation:

Redlining is the practice of denying loans or insurance to people in specific geographic areas, often based on racial or ethnic composition. In this context, a bank's refusal to loan in a run-down minority neighborhood would be considered redlining, as it involves discriminatory lending practices based on the neighborhood's characteristics.

b. Blockbusting: Blockbusting is a practice in real estate where agents induce homeowners to sell their properties by suggesting that members of a protected class (usually minorities) are moving into the neighborhood, leading to a decline in property values. This option is not correct in the context of a bank refusing a loan.

c. Steering: Steering is the practice of directing or guiding potential homebuyers towards or away from certain neighborhoods based on their race, ethnicity, or other protected characteristics. It typically involves real estate agents rather than banks. This option is not correct in the context of a bank refusing a loan.

d. Lender preference: This term is not commonly used to describe discriminatory lending practices. The issue in the question is more specifically related to systemic discrimination against a particular neighborhood, which is captured by the term "redlining." Therefore, this option is not the correct answer in this context.

Therefore, the correct answer is option a. Redlining.