Consumer Alert: Some refinance offers too good to be true - CBS46 News

Consumer Alert: Some refinance offers too good to be true

Posted: Updated:

If you're planning to refinance your mortgage, beware -- there is a scam you should know about.

What you're offered is a low-interest refinance, but then you're signed to a much higher than average rate.

Nerida Cuccia happened to be in the market to refinance her mortgage.

"They made a tremendous offer and at first, I thought 'too good to be true," she said.

Ricardo White, the voice on the phone, said he could offer her a 3.25 percent fixed interest rate the first year and five percent fixed for the remainder of the loan. Postal inspectors began tracking the case and found it was a classic bait and switch.

"They will have you sign documents that say 2.25 or 3.25 percent fixed," said US Postal Inspector John Marsh.

At the same time, they will have you sign more documents for the actual mortgage they plan to submit to banks -- with much higher rates.

"They would misrepresent the terms of the loans to induce the consumers into refinancing. The homeowners unwittingly got a very high adjustable rate mortgage and the fraudsters got a nice commission," Marsh said.

In Cuccia's case, she was promised 3.25 percent. In reality, she signed a loan that started at eight percent the first year and would go as high as 15 percent.

"The documents they leave with you in no way shape or form will tell you what the terms of the loan are," Cuccia said.

This is done by design and is at the heart of the scam. "They don't want you to realize you have been hoodwinked and cancel the loan in three days, which is the standard practice with loans," said Marsh.

Cuccia's closing with White was held in her home. "I felt like somebody walked into my house and robbed me blind," she said.

Postal inspectors say White along with the ring leader, Gregory Cooper, scammed more than 50 victims out of more than $2 million.

Cuccia was able to refinance again, but lost more than $20,000 in closing costs for both transactions.

"To be able to face Mr. White in court and tell him how I felt nothing could ever, the money, nothing was as important as being able to look at his face once more and know he was going to jail," she said.

If you are in the market to refinance, always do your homework and reach out to reputable financial institutions. You should never feel pressured to sign papers that you cannot read and evaluate at the time of closing.

Copyright 2014 WGCL-TV (Meredith Corporation). All rights reserved.