Final answer:
Redlining is the discriminatory practice where communities primarily composed of minorities were marked as high credit risks by the FHA, leading to a lack of financial and housing opportunities for these groups, furthering residential segregation. This practice had long-lasting effects on educational and financial disparities in affected communities.
Step-by-step explanation:
The process by which communities that were predominantly minority or in the process of integrating received the lowest rating from the Federal Housing Administration (FHA) is known as redlining. This discriminatory practice involved marking neighborhoods with high concentrations of racial minorities with red lines on maps to indicate they were high-risk areas for credit. As a result, banks and other lending institutions were dissuaded from providing loans to residents in these areas, which perpetuated residential segregation and denied minorities the same financial opportunities afforded to white individuals. Furthermore, during the Great Depression, the FHA was involved in discriminatory mortgage and insurance practices by prioritizing help for neighborhoods without a significant presence of "foreign-born, negro, or lower grade population."
The lasting impacts of redlining are significant, as they contribute to ongoing educational and financial disparities in certain communities. This practice stands in contrast to other unethical real estate tactics like blockbusting, which involved speculators using fearmongering to drive white residents out of neighborhoods and then selling homes at inflated prices to minority buyers. Despite the Fair Housing Act of 1968 which outlawed blockbusting practices, the legacy of redlining continues to affect communities today.