With the trend of lenders rating or categorizing specific towns, cities and counties, could this be a new form of redlining?  Countrywide, GMAC and others are using a rating system to rank areas as "soft," "declining" or other ways to categorize "risky" places to lend money.

In these areas, a higher down payment is usually required, higher interest rates may be charged and more requirements to be met in order to secure a loan.  In general, the demographics for these locales show lower income averages, higher numbers of minority residents and other factors that lead some critics to label this practice as redlining.  There are, of course, exceptions such as McClean, Virginia-which has a very high income average.

In cases where an entire metro area, county or zip code are labeled, there will be neighborhoods or whole sections that are outperforming others yet be subject to higher downpayment and other requirements.  Fannie Mae has contributed to the practice by requiring lenders to increase downpayment requirements by 5% in "declining market areas."

It is understandable to see these practices as "good business," but are ethical standards being breached by following the numbers?