What is the term for the illegal banking practice that denies loans to families in low-income neighborhoods?

The correct term for the illegal banking practice that denies loans to families in low-income neighborhoods is redlining. Redlining refers to the systematic denial of financial services, such as loans and mortgages, to residents in certain areas, typically based on the racial or economic demographics of those neighborhoods. This practice has deep historical roots in the United States and has led to significant disparities in wealth and homeownership rates, contributing to cycles of poverty in affected communities.

Redlining is specifically tied to geographic regions, where lenders would mark areas on maps—often corresponding to minority neighborhoods—indicating that those areas were deemed too risky for investment. This practice not only restricted access to credit but also perpetuated social inequalities, making it a critical issue for social work and policy reform.

While other terms like predatory lending, disparate impact, and loan sharking refer to different unethical or illegal financial practices, they do not specifically describe the systematic denial of loans based on neighborhood characteristics in the way redlining does. Predatory lending involves the exploitation of vulnerable borrowers through unfair or deceptive loan terms. Disparate impact refers to policies that can lead to discrimination, even if not intentionally target any group. Loan sharking relates to lending at illegally high-interest rates, often associated with illegal lenders. Understanding