What term refers to the practice where lenders refuse to lend in certain neighborhoods?

The term that refers to the practice where lenders refuse to lend in certain neighborhoods is redlining. This practice involves discriminatory policies that typically target neighborhoods predominantly occupied by racial or ethnic minorities. Redlining leads to systemic disinvestment in these areas, severely affecting residents' access to mortgages, insurance, and other financial services.

This practice has deep historical roots and has contributed to the perpetuation of economic disparities and segregation in housing. The term is derived from the practice of using red ink to outline areas on maps where lenders would not provide services, marking these neighborhoods as high-risk. Understanding redlining is critical for real estate professionals as it informs them about the legal and ethical implications of fair lending practices and the importance of promoting equal opportunity in housing.