Federal and state legislation intended to curb the practice of geographic loan discrimination or redlining may have the unintended and undesirable effect of preventing mortgage originators from using environmental characteristics as criteria in lending evaluations. Since the California fault rupture zones (special studies zones) do not contain systematic concentrations of poor, black, or elderly households, they should be targets for differential lending policies, such as mandatory earthquake insurance or structural reinforcements as conditions for mortgage loans. A clarification of the wording of the Housing Financial Discrimination Act is needed to alleviate some of the present potentially damaging effects of failing to discourage residential investment in surface fault rupture zones.
Palm, Risa and Corbridge, James. 1982. "The Unintended Impacts of Anti-Redlining Legislation." Journal of Environmental Systems, 12 (4): 341-350.