This is considered red-lining.

They legally cannot deny a loan for a property in a given area, that is an illegal practice called redlining.

This is just a screen shot of the city limits (red line). 

If we bought a house, the longterm cumulative effect looks like this: The grey line is property value, the green line is your equity in the property, and the red line is cumulative payments.

Do you typically just have them in the LOI or do you have your lawyer redline the legal documents?

Many custom craft the contract and redline the word doc back and forth until buyer and seller can reach agreement.

Long Beach (a port town, the largest on the West coast), has always been a "rough town" and you need the guidance of a local agent.It is illegal to red line specific areas (ie identify neighborhoods as undesirable). 

That's nuts.The tenant's refusal to pay late fees is an interesting problem -- with OP's tenant so close to moving out, I agree that it's best to make an effort to improve the relationship and not draw a red line.  

Most will redline it for you but will not complete your transaction without reviewing your contract before you present them a deal. 

Is it legal for a bank to redline areas of no lending?