Industry News

FDIC issues warning about mortgage lending sales pitch

Says Community Reinvestment Act offer is bogus

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Some mortgage lenders are using a deceptive direct mail campaign that encourages homeowners to apply for a loan by claiming they are entitled to cash grants or equity distributions under the Community Reinvestment Act. The Federal Deposit Insurance Corp. issued a warning Monday saying that the CRA is a real law, but that the offer is not. Consumers have contacted the FDIC with questions and complaints after receiving solicitations suggesting there is a "Community Reinvestment Act (CRA) Program" that entitles certain homeowners to payments. "These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home," the FDIC warned. Enacted in 1977, the Community Reinvestment Act encourages banks and savings and loans to make credit available in low- and moderate-income neighborhoods, but does not entitle individuals to any grants or loans. The FDIC did not identify the lenders using the ploy by name. The San Francisco Chr...