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Homeowners warned about new loan scam

SHARE Homeowners warned about new loan scam

WASHINGTON — Homeowners beware: You could be victimized by a certain scam where someone tries to lure you into applying for a loan secured by your home.

The Federal Reserve put out that warning Friday in response to questions and complaints from people about direct-mail solicitation scams that describe a "Community Reinvestment Act Program" that entitles certain homeowners to cash grants or equity payments. No such federal program exists, the Fed said.

"Some of these solicitations may be read to indicate that the Federal Reserve endorses or supports the offers they contain," it said. "These solicitations appear to be a deceptive effort to encourage consumers to apply for a mortgage loan secured by the consumer's home."

The central bank didn't provide further details.

"The Federal Reserve cautions the public about loan solicitations or other offers from lenders or mortgage brokers that offer consumer cash grants or equity disbursements as part of a 'CRA Program,"' it said in a statement.

There is, in fact, a 1977 federal law called the Community Reinvestment Act. It encourages banks and other financial institutions to help meet the credit needs of their communities, especially low-income neighborhoods. But that law does not entitle people to any grants or loans.

The Fed urged people considering taking out a loan secured by their house to shop around.