What is redlining?

Redlining refers to the practice of systematically denying mortgage loans or insurance to residents of certain areas based on the demographic composition of those neighborhoods. This term historically comes from the use of red ink by banks and insurers on maps to delineate areas where they would not lend money, effectively marking those areas as high risk due to the racial or ethnic makeup of the residents.

By choosing geographical areas where no mortgage loans are issued based on demographics, redlining creates significant obstacles for residents in those regions, perpetuating cycles of poverty and limiting access to homeownership, which is a key component of building wealth. This practice has been widely criticized and is considered discriminatory, contributing to socioeconomic disparities that persist to this day.

The other options focus on different aspects of lending and property assessments, but they do not encapsulate the essence of redlining, which is specifically about the discriminatory practice of limiting access to loans based on the demographics of a neighborhood.