Redlining, or the practice of denying credit to residents of certain areas due to the high number of ethnic or racial minorities living there, is not a new problem. It’s also not limited to mortgage loans.
For decades, many lenders avoided or flat-out refused to lend to home borrowers in minority communities. Redlining gets its name from the literal red lines that were on maps created by the federal government in the late 1930s to identify high-risk neighborhoods that they deemed to not be creditworthy. The Federal Housing Authority refused to insure mortgage loans in these areas, which were almost always minority communities.
