An MLO consistently recommends high-cost subprime loan products to African American borrowers who would actually qualify for conventional prime rate loans. This practice is an example of:

Correct answer: Reverse redlining

Reverse redlining — also called predatory inclusion — occurs when lenders specifically target minority communities or individuals with predatory, high-cost, or unfavorable loan products, particularly when those borrowers would qualify for better terms. This is the opposite of traditional redlining (refusing to lend) and is an illegal form of discrimination under the Fair Housing Act and ECOA. Blockbusting involves inducing homeowners to sell by making representations about minority groups moving into the area. Disparate impact refers to neutral policies producing discriminatory outcomes, which is not the case here — the practice is targeted and intentional.