What appears to be a deceptive effort to encourage consumers to apply for mortgage loans secured by their homes has prompted the Federal Reserve to issue a warning to consumers.
The Federal Reserve Board of Governors said it has received questions and complaints about an advertising mail campaign marketing a “Community Reinvestment Act (CRA) program that entitles certain homeowners to cash grants or equity disbursements.” The marketing pieces may also imply that the program is sponsored by the Federal Reserve.
The CRA is a 1977 federal law enacted to encourage depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods. The CRA, however, does not entitle individuals to grants or loans. No such federal programs exist and these programs are not required by the CRA. Further, the Federal Reserve does not in any way endorse or sponsor mortgage loan programs.
The Fed is asking anyone who receives questions from the public on this topic to direct them to the Board’s press release at www.federalreserve.gov/boarddocs/press/other/2007.