Texas 30-Hour Principles of Real Estate Practice Exam 2025 - Free Real Estate Practice Questions and Study Guide

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What term describes a lender's refusal to lend in a specific area based on its minority demographics?

Discrimination

Redlining

The term that accurately describes a lender's refusal to lend in a specific area based on its minority demographics is "redlining." This practice has historical roots in the mid-20th century when lenders would draw red lines on maps to delineate areas they deemed too risky for mortgage lending, often based on the racial or ethnic composition of those neighborhoods. Redlining not only restricted access to loans for individuals living in these areas but also contributed to long-term economic disparities and the decline of minority neighborhoods.

The term "discrimination" refers to unfair treatment based on certain characteristics but lacks the specific context of geographic and racial factors associated with lending practices. "Fair Lending" encompasses laws and policies designed to prevent discriminatory lending, highlighting efforts to ensure all individuals have equal access to credit regardless of demographics. "Exclusionary lending" broadly indicates practices that exclude certain groups from obtaining loans but is not as historically specific as redlining, which captures the systematic nature of this geographic and demographic-based denial of funds.

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Fair Lending

Exclusionary lending

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