What is an example of redlining in lending practices?

The correct answer highlights a discriminatory practice where lenders impose different rates and terms specifically for minority applicants. This behavior reflects redlining, a historical practice where certain neighborhoods, often populated by minority communities, were systematically denied loans or given less favorable lending terms. Such practices are rooted in racial discrimination and contribute to the long-term disadvantages faced by these communities in accessing fair financial services.

Redlining is characterized by unequal treatment based on race rather than an individual’s creditworthiness or financial status. This reinforces socio-economic disparities and perpetuates inequities in homeownership opportunities. Understanding this concept is crucial for recognizing and combating discriminatory lending practices.