The practice described is redlining. Redlining is an illegal, discriminatory practice in which a lender refuses to make loans or provide other financial services for properties in specific geographic areas, based on the race, ethnicity, or other protected characteristic of the residents, rather than on an individual applicant's creditworthiness or the property's qualifications. The bank's refusal to lend in a neighborhood due to the ethnic background of its residents is a classic example of redlining, which is a direct violation of the federal Fair Housing Act and the Equal Credit Opportunity Act.

A. blockbusting: This is the illegal practice of inducing homeowners to sell by creating fear that minority groups are moving into the area, which will lower property values.

B. boycotting: This is an antitrust violation where competitors agree not to do business with a specific firm or individual, not a discriminatory lending practice.

D. steering: This is the illegal act of guiding prospective homebuyers toward or away from certain neighborhoods based on their protected class status.

1. North Carolina Real Estate Commission. (2023). North Carolina Real Estate Manual (2023-2024 ed.). Chapter 8, Fair Housing and Ethical Practices, pp. 8-10. The manual defines redlining as the practice of "refusing to make mortgage loans or issue insurance policies in specific areas for reasons other than the economic qualifications of the applicants."

2. U.S. Department of Housing and Urban Development (HUD). (n.d.). Fair Lending: Redlining. Retrieved from the official HUD website. The site states, "Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race or national origin of the residents in that community."

3. U.S. Department of Justice. (n.d.). The Fair Housing Act. Retrieved from the official DOJ website, Civil Rights Division. The Act, codified at 42 U.S.C. §§ 3601-3619, makes it unlawful to "discriminate in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of race, color, religion, sex, familial status, or national origin," which includes the provision of mortgage loans.