Massachusetts has one of the broadest applications of the Community Reinvestment Act in the country, but that’s not good enough for local housing advocates – they’re now throwing their weight behind new efforts to get the law expanded on a federal level.

New legislation, currently gaining supporters in Congress and due for a hearing in Barney Frank’s Financial Services Committee this week, will place CRA responsibilities on insurance companies, credit unions and mortgage and securities companies.

Advocates of CRA have argued that the outdated law allows giant loopholes for credit unions or banks that operate without local branches, as well as the mortgage companies many now blame for disastrous subprime lending.

That inequity is the basis for a new report that highlights the large gap between the cost of loans originated by non-CRA lenders versus CRA lenders in the same neighborhoods. The Massachusetts Affordable Housing Alliance, which successfully fought to get CRA responsibilities to mortgage companies in Massachusetts in 2007, participated in the study and has been using its findings as yet more evidence of why the law is in need of an update.

Based on information taken in seven major metropolitan areas in 2007, non-CRA obligated lenders were more likely to make higher-cost mortgages in the same neighborhoods where CRA lenders consistently made less-costly loans. Interestingly, although Massachusetts’ CRA laws are more extensive than many states, Boston had the biggest gap of all the metropolitan areas: non-CRA lenders were seven times as likely to make more expensive loans as their CRA counterparts.

Tom Callahan, MAHA executive director, attributes that large gap to the better-than-average rates of Boston’s CRA lenders, rather than any higher-than-average costs on the part of the non-CRA lenders, which were mostly mortgage companies.

CRA advocates like John Taylor, the Boston-based head of the National Community Reinvestment Coalition that proposed the legislation currently working through Congress, said it’s often necessary to lower rates for borrowers in these neighborhoods, but he argues that the banks can offer these loans profitably; contrary to popular belief, such loans have low default rates.

Taylor says it’s high time CRA was brought to institutions such as credit unions, which have become increasingly banklike in their behavior since CRA was created in the 1970s.

Callahan noted the political winds have shifted in favor of CRA’s expansion. Banks themselves often support efforts to get the CRA expanded, he said, noting that the Massachusetts Bankers Association supported MAHA in its efforts to get CRA to cover mortgage companies several years ago.

Still, CRA’s expansion attracts considerable pushback: insurance companies, for example, say – among other problems – that CRA can’t be applied to insurers because of the current multi-state regulatory system.

Callahan also acknowledges that many of the non CRA lenders in the study are now out of business thanks to the crippled housing industry – but make no mistake, he said, that hasn’t solved the imbalance problem.

“I don’t think anybody feels like this market correction we’ve seen – with some of the mortgage companies going out of business – is a permanent one,” he said. “It’s probably important for Congress to take advantage of this breathing period that we have,” and change the regulation, which hasn’t been altered since 1995.

But Leo MacNeil, senior vice president for Brockton-based HarborOne Credit Union, which is under CRA obligations thanks to Massachusetts law, said extending CRA requirements to more lenders has his full support – as long as regulators are also tasked with the ability to probe into lenders’ activities and have the ability to take meaningful action if they smell a rat.

“I’m not sure it has the teeth to correct those problems,” he said.

MacNeil said HarborOne didn’t offer lower rates as a part of its CRA compliance, it merely made sure loans were extended to borrowers with good credit – the act is about access to worthy borrowers, he said, not about cutting special deals in low-income neighborhoods.