What is the illegal practice of a lending institution denying loans for certain areas of a community called?

The illegal practice of a lending institution denying loans for certain areas of a community is called redlining. This term originated from the practice of using red ink to outline neighborhoods on maps that lenders deemed too risky for mortgage loans, often based on racial or socioeconomic factors. Redlining is considered discriminatory and has contributed to systemic inequalities in housing and financial markets. It has significant social implications, perpetuating cycles of poverty and limiting access to financial resources for residents in the affected areas.

The other terms listed do not pertain to this practice. Regression refers to a statistical method or phenomenon in real estate that analyzes past trends; reinstatement involves bringing a loan current after default, and a release deed relates to the formal removal of a lien from property titles. Understanding these distinctions helps clarify the specific nature of redlining as a serious issue in lending practices.