There is yet another shady deal going around with mortgage loans these days. If you receive an offer from a lender or mortgage broker under a “Community Reinvestment Act (CRA) Program” endorsed by the Federal Reserve Board, raise that red flag right away. First and foremost, the Federal Reserve does not endorse or sponsor any mortgage loan programs so anyone claiming a loan is sponsored by the Federal Reserve Board is out and out lying. There have recently been a large number of complaints by consumers who have received deceptive ads for mortgage loans that come with cash grants or equity disbursements and many of these claim to be CRA Program mortgages.

Part of the confusion is that the Community Reinvestment Act does exist. It’s a valid federal law that was enacted thirty years ago to encourage banks and other financial institutions to help meet the credit needs of individuals in low and moderate income communities. While the act does exist, there is no federal “CRA Program” that entitles consumers to any grants or loans as part of it.

The Federal Reserve Board urges all consumers who are considering taking out a loan using their house as security to shop around to get the best (legitimate) deal. In an effort to help you secure the best deal, you can get a free online pamphlet which was prepared by eleven federal government agencies called Looking for the Best Mortgage: Shop, Compare, Negotiate which provides useful information about home loans.

If you happen to receive any “CRA Program” mortgage loan solicitations, you should contact the Federal Reserve Board by email at crahelp@frb.gov or by calling the CRA Assistance Line at 202-872-7584.