What practice refers to the denial of loans based on geographic location rather than applicant qualifications?

The practice referred to in the question is recognized as redlining. This term describes the systematic denial of loans or insurance to individuals based solely on their geographic location, typically affecting communities that are predominantly inhabited by minorities or those with lower income.

Redlining originated from the 1930s when financial institutions began outlining areas on maps with red ink where they deemed too risky to offer loans. This discrimination can result in long-term economic disadvantages for residents in those areas, as they may have limited access to financial resources, leading to disparities in wealth accumulation and property investment across different neighborhoods.

The other options represent different real estate practices: steering involves directing clients towards or away from certain neighborhoods based on discriminatory factors, blockbusting is the illegal practice of inducing homeowners to sell by instilling fear that the neighborhood will change, and hypothecating refers to the pledging of property as collateral for a loan without giving up possession. While all these practices involve discrimination or manipulation, redlining specifically addresses the denial of loans based on location, making it the correct answer to the question.