what is it called when a lender makes it difficult or impossible for a particular neighborhood to borrower money?
The practice you’re asking about is called redlining.
What redlining means
Redlining is when lenders make it difficult or impossible for people in certain neighborhoods to get loans or other financial services, not because of their individual qualifications, but mainly because of where they live or the racial or ethnic makeup of that area. Historically, this often targeted Black and other minority neighborhoods, leading to long‑term segregation and a large racial wealth gap.
How it typically looks
- Refusing to make mortgages in a neighborhood, even to well‑qualified borrowers, just because the area is majority‑minority.
- Charging higher interest rates or worse terms for loans in certain areas than in others with similar economic profiles.
- Drawing maps or using internal rules that label some neighborhoods as “too risky” almost entirely because of race or ethnicity.
Legal status today
Redlining on the basis of race, color, religion, sex, national origin, and other protected characteristics is illegal under the Fair Housing Act and other civil rights laws, though its effects are still visible today. Regulators and fair‑housing groups continue to investigate and sue lenders when modern forms of redlining are uncovered.
TL;DR: When a lender makes it difficult or impossible for a particular neighborhood to borrow money, it is called redlining.