Posted in consumer protections, Financial

CFPB takes action against NewDay Financial

Justice League

Consumer Financial Protection Bureau took action against NewDay Financial for deceptive mortgage advertising and kickbacks, making the lender pay a $2 million civil money penalty for its actions.

NewDay is a Maryland-based, nonbank mortgage lender owned by Chrysalis Holdings, a private company. Its primary business is originating refinance mortgage loans guaranteed by the Veterans Administration, which is mainly advertises for through direct mail campaigns. Between July 2011 and July 2014, NewDay sent consumers over 50 million mortgage solicitations by postal and electronic mail.

According to the action, NewDay deceived consumers about a veterans’ organization’s endorsement of NewDay products and participated in a scheme to pay kickbacks for customer referrals.

Beginning in 2010, NewDay entered into a marketing arrangement with a veterans’ organization that was facilitated by a broker company.

As part of that agreement, NewDay paid “lead generation fees” to the veterans’ organization and the broker company, in addition…

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