Redlining Legal Definition
Redlining is a legal term used to describe the discriminatory practice by financial institutions of refusing or limiting loans, insurance, and other services to residents of specific neighborhoods or zip codes. The term ‘redlining’ is derived from the practice of using red lines on maps to identify these neighborhoods.
The federal Fair Housing Act of 1968 made it illegal to discriminate against borrowers on the basis of race, color, religion, national origin, sex, familial status, or disability. However, redlining continues to be a problem in many communities across the United States.
There are a number of ways that financial institutions can engage in redlining. They may refuse to lend money to people who live in certain neighborhoods or zip codes. They may also charge higher interest rates or fees for loans in these areas. Or they may require higher down payments than they do for loans in other areas.
Redlining can also occur when real estate agents steer homebuyers away from certain neighborhoods because of their racial or ethnic makeup. And landlords may refuse to rent apartments or homes to tenants based on their race or ethnicity.
Discriminatory practices like redlining can have a profound impact on families and communities. People who live in areas that are discriminated against often have difficulty accessing credit and affordable housing. This can lead to concentrated poverty and poor schools, which can further perpetuate the cycle of discrimination.
