Which term describes the policy aimed at discouraging lending in certain neighborhoods, contributing to disinvestment?

Which term describes the policy aimed at discouraging lending in certain neighborhoods, contributing to disinvestment?

• A. Blockbusting
• B. Gentrification
• C. Disinvestment
• D. Redlining

Answer: (D)

Redlining is the practice of denying or limiting financial services, especially mortgage lending, to a neighborhood based on its perceived risk, often tied to racial or ethnic composition. Lenders would mark certain areas as high risk and refuse loans or offer unfavorable terms, effectively steering investment away. This policy directly reduces lending in those neighborhoods, which leads to disinvestment as property maintenance declines, values stagnate or fall, and economic opportunities shrink. Other terms describe different ideas: blockbusting involves exploiting fears to provoke sales, gentrification refers to wealthier buyers moving in and raising costs, and disinvestment is the outcome rather than the policy itself. Redlining is the term that names the discriminatory lending policy behind the cycle of reduced investment.

Redlining is the practice of denying or limiting financial services, especially mortgage lending, to a neighborhood based on its perceived risk, often tied to racial or ethnic composition. Lenders would mark certain areas as high risk and refuse loans or offer unfavorable terms, effectively steering investment away. This policy directly reduces lending in those neighborhoods, which leads to disinvestment as property maintenance declines, values stagnate or fall, and economic opportunities shrink. Other terms describe different ideas: blockbusting involves exploiting fears to provoke sales, gentrification refers to wealthier buyers moving in and raising costs, and disinvestment is the outcome rather than the policy itself. Redlining is the term that names the discriminatory lending policy behind the cycle of reduced investment.