What does redlining refer to in the context of mortgage loans?

Redlining refers specifically to the practice of drawing a line around particular areas for lending. This term originates from the way lenders would use red ink to outline neighborhoods on maps where they deemed lending too risky, often based on racial or socioeconomic factors. As a result, residents of these areas would find it difficult or impossible to secure mortgage loans, leading to systemic discrimination in housing finance. This practice has historically contributed to long-lasting disparities in homeownership rates and wealth accumulation among different communities. Understanding redlining is crucial for recognizing the implications of discriminatory lending practices and the importance of fair housing policies aimed at promoting equity in access to mortgage financing.