Bonita Hanks lives in Bastrop Valley, California. She has applied for a mortgage loan for purposes of buying a larger home there. The loan officer at the bank explains to the bank employee who took the application that there would be no loans to people in Bastrop Valley. The loan officer explained, "Are you aware of how many people in Bastrop Valley fail to make their payments? That's a bottomless pit out there. No one out there is getting any credit from this bank. Even insurance companies don't write policies out there." Basing a decision to extend credit based on residence is:

Question

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Basing a decision to extend credit solely on the area of residence, especially if it leads to discrimination against residents of certain neighborhoods (often based on racial or economic factors), is known as redlining. This practice is prohibited under the Equal Credit Opportunity Act (ECOA), which makes it illegal to discriminate against applicants on the basis of race, color, religion, national origin, sex, marital status, age, or because they receive public assistance.

Bonita Hanks Lives in Bastrop Valley, California