What illegal practice involves quoting a higher interest rate to customers based on minority area location?

The practice of quoting a higher interest rate to customers based on their location in a minority area is known as redlining. This term originates from the practice where lenders would outline neighborhoods considered high-risk (often minority or low-income areas) in red ink on maps, effectively denying mortgages or charging higher rates to residents in those areas despite their financial qualifications.

Redlining is considered a discriminatory lending practice because it targets specific communities based on race or economic status, rather than individual financial merit. This action exacerbates existing inequalities in homeownership and access to financial resources, thereby perpetuating cycles of poverty and disadvantage in affected neighborhoods.

In contrast, discrimination broadly refers to unfair treatment of individuals based on protected characteristics, which encompasses redlining as a specific form of discriminatory practice. Steering involves directing clients towards or away from certain neighborhoods based on their race or ethnicity, while predatory lending refers to deceptive financial practices that impose unfair loan terms on borrowers, often leading to higher costs and risks. Each of these terms represents different aspects of unfair practices within real estate and mortgage lending, but redlining specifically addresses the issue of geographic and racial discrimination in pricing and access to loans.