Last week, the Federal Reserve Board alerted the public to instances of questionable solicitations directed at homeowners. The Federal Reserve has received inquiries and complaints from recipients of direct mail solicitations that suggest there is a "Community Reinvestment Act (CRA) program" that entitles certain homeowners to cash grants or equity disbursements. Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain. These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home.

The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumers cash grants or equity disbursements as part of a "CRA Program." No such federal programs exist and these programs are not required by the CRA.

The Community Reinvestment Act is a federal law that was enacted in 1977. It encourages depository institutions to help meet the credit needs of their communities, including low- and moderate-income neighborhoods, in ways that are consistent with safe and sound banking operations. The CRA does not entitle individuals to any grants or loans.

The Federal Reserve also wants consumers to know that it does not endorse or sponsor mortgage loan programs. Consumers should be very suspicious of conducting business with lenders or mortgage brokers that make deceptive claims. Individuals who are considering taking out a loan using their house as security are urged to shop around. Comparing loan programs offered by a variety of different lenders can help almost always you to get a better deal.