A lender and a property insurer both decline to write business in an older neighborhood, and the record shows the decision rests on the protected characteristics of the residents rather than on documented loss experience or property condition. What practice is this?
Correct Answer
A) Redlining
Redlining is the refusal to lend, insure or otherwise provide services in a geographic area because of the protected characteristics of the people who live there. Because the Fair Housing Act reaches residential real estate related transactions and the provision of brokerage and financial services, both the lender and the insurer are covered. Underwriting that rests on documented risk is lawful; underwriting that rests on who lives in the area is not.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
Antitrust violations in real estate occur when competing brokerages or agents engage in practices that restrain trade, reduce competition, or harm consumers through collusion. These violations are governed by the Sherman Antitrust Act and can result in severe penalties.
Broker supervision is the legal obligation of a designated or managing broker to oversee and be accountable for the real estate activities of all salespersons and associate brokers operating under their license.
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