What does redlining refer to?

Redlining refers to the practice where financial institutions, such as banks or insurance companies, refuse to provide mortgage financing or insurance to individuals based on the geographical area in which they live, often disproportionately affecting minority or marginalized communities. This discriminatory practice originated in the 1930s when lenders would draw red lines on maps to indicate neighborhoods that were deemed too risky for investment, largely based on racial or ethnic demographics rather than the actual creditworthiness of the individuals seeking loans.

The impact of redlining has been profound, contributing to systemic inequality and hindering homeownership opportunities for many people in affected communities. The option emphasizing the refusal of mortgage financing based on geographical or demographic factors accurately encapsulates the essence of redlining as a practice rooted in discrimination.