Question

"Infro Inc. is a major lender. It plans to include the zip codes of its customers as a major factor when offering loans. This allows Infro to reduce the amount of risk it takes by not providing loans in certain areas where property values are low. In this case, which of the following statements is true?"

		"Before Infro implements its decision, it must obtain permission from the Federal Trade Commission to do so."
		The decision of Infro is legal under the provisions of the Equal Credit Opportunity Act.
		"Before Infro implements its decision, it must specify the minimum average property value a person must have before applying for a loan."
		"If Infro goes through with its decision, it is engaging in redlining."

Answer 1

In given case, Infra Inc. is using zip codes to determine the sanction of loans to borrowers in terms that those residing in zip codes with low property values will be denied loan.

When a creditor engages in such practice where it discriminate against borrowers in terms of where they reside then it is said that creditor is engaging in redlining.

So, in this case, if Infro goes through with its decision, it is engaging in redlining.

The correct answer is the option (4) [If Infro goes through with its decision, it is engaging in redlining].