What is the term used for the illegal practice of refusing mortgage financing based on racial composition?

The term that specifically refers to the illegal practice of refusing mortgage financing based on racial composition is redlining. This practice originated in the 1930s when lenders systematically denied mortgages to people in neighborhoods predominantly inhabited by racial minorities, effectively drawing "red lines" on maps to signify areas where they would not issue loans. Redlining leads to economic disadvantages for affected communities, perpetuating cycles of poverty and limiting access to homeownership based on race or ethnicity. It is a clear example of discriminatory policies in the housing market that have had long-lasting impacts on various communities.

This is different from other terms such as segregation, which refers to the separation of different racial groups, or predatory lending, which encompasses unfair, deceptive, or fraudulent practices in getting borrowers to take loans. Discrimination is a broader term that includes any unfair treatment based on characteristics such as race, but redlining specifically addresses the mortgage financing context.