A Nebraska lender tells broker Angela that it will not issue mortgage loans for properties located in a specific zip code in Lincoln, regardless of the individual applicant's creditworthiness. The lender's policy disproportionately affects minority applicants in that area. Angela suspects this is illegal. Which federal fair housing violation does this lender's practice most likely constitute?
Correct Answer
B) Redlining, because the lender is refusing to lend in a geographic area based on its racial or ethnic composition
Redlining is the illegal practice of refusing to provide mortgage loans, insurance, or other financial services in specific geographic areas based on the racial or ethnic composition of those areas, regardless of individual applicants' qualifications. This practice violates the federal Fair Housing Act (42 U.S.C. § 3604) and the Equal Credit Opportunity Act. The lender's blanket refusal to lend in a specific zip code that disproportionately affects minority applicants is a classic example of redlining. Angela should report her suspicion to HUD or the Nebraska Equal Opportunity Commission (NEOC).
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Related Topics & Key Terms
Key Terms:
Related Concepts
A tie-in arrangement is an illegal antitrust practice in which a seller conditions the purchase of one product or service on the buyer's agreement to purchase a separate product or service.
A trust account, also called an escrow account, is a separate bank account maintained by a broker to hold funds belonging to others, such as earnest money deposits, security deposits, or other client funds.
Advertising regulations govern how real estate licensees may market properties and services, requiring truthful, non-deceptive advertising that includes proper identification of the brokerage.
More Practice Of Real Estate Questions
In Wyoming real estate practice, an associate broker or salesperson is not associated with a responsible broker at renewal. What should the licensee remember?
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