Redlining
The illegal practice of a lender denying or limiting loans in certain areas based on the neighborhood's racial or ethnic makeup.
Redlining is when a lender refuses to make loans, or offers worse terms, in particular neighborhoods because of the race or ethnicity of the residents rather than the creditworthiness of the borrower or the property.
It violates the Fair Housing Act and the Equal Credit Opportunity Act.
On the exam
Exam trap
Tested in
Real Estate Practice (8% of the exam)
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- Steering
The illegal practice of directing buyers toward or away from neighborhoods based on a protected class.
- Blockbusting
The illegal practice of inducing owners to sell by suggesting that members of a protected class are moving into the area.
- Fair Housing Act
The federal law that prohibits housing discrimination based on race, color, religion, national origin, sex, familial status, and disability.
This definition is Texas real estate exam-prep education, not legal, tax, or professional advice. Verify current rules against the official source before relying on them for a real transaction. Back to the full glossary.