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Beware Classic "Bait and Switch" Scams

Con-artists claim they can offer you a low-interest mortgage refinance, but in the end they sign you up for a rate much higher than the market.
Con-artists claim they can offer you a low-interest mortgage refinance, but in the end they sign you up for a rate much higher than the market.

"They made a tremendous offer and at first I thought "too good to be true"," said victim Nerida Cuccia.

Cuccia happened to be in the market to refinance her mortgage. Ricardo White, the voice on the phone, said he could offer her a 3.25% fixed interest rate the first year and 5% fixed for the remainder of the loan. She told White she was interested - she also told him his tone made her hesitant.

"You're so high pressure; you sound a little bit like you're forcing me into something," Cuccia said.

He quickly apologized and because of the attractive rates, Nerida decided to proceed with the refinancing.

"People get pulled in by the numbers and then they get… in the end… pay a high price," Cuccia explained.

US Postal Inspector John Marsh said, "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."

Postal inspectors began tracking the case and found it was a classic bait and switch scam at closing.

"They will have you sign documents that say 2.25 or 3.25% fixed. But that is not true, that is a fraud," Marsh said.

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.

In Nerida's case - she was promised 3.25%. In reality she signed a loan that started at 8% the first year and would go as high as 15%.

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

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

Ricardo White was sentenced to 9 years in prison and Gregory Cooper is in jail for 17 years and owes more than $2 million in restitution.

Postal inspectors say 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 can not read and evaluate at the time of closing.
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