Shady 'CRA Program' Mortgage Loans

[Valerie S. Johnson]

By Valerie S. Johnson

If a lender or mortgage broker offers you a mortgage under a "Community Reinvestment Act (CRA) Program" endorsed by the Federal Reserve Board, be very, very suspicious. The Federal Reserve does not endorse or sponsor any mortgage loan programs. There have been many complaints recently by consumers who receive deceptive ads for mortgage loans with cash grants or equity disbursements.

The Community Reinvestment Act is 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. However, there is no federal "CRA Program" that entitles consumers to any grants or loans.

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. An online pamphlet prepared by eleven federal government agencies, Looking for the Best Mortgage: Shop, Compare, Negotiate, provides useful information about home loans.

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