On August 29, 2024, the CFPB took action against repeat offender New Day Financial (NewDay USA) for deceiving active duty servicemembers and veterans seeking cash-out refinance loans. The CFPB found that NewDay USA gave misleading and incomplete cost comparisons to borrowers refinancing in North Carolina, Maine, and Minnesota, which made the company’s loans appear less expensive relative to their existing mortgages.
CFPB Director Rohit Chopra said the following in a statement:
“NewDay USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans. NewDay USA’s misconduct has no place in the VA home loan program.”
New Day Financial, LLC, operating under the brand NewDay USA, is a non-bank direct mortgage lender and specializes in offering mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). In 2015, the CFPB took action against New Day Financial for paying illegal kickbacks and deceiving borrowers about a veterans’ organization’s endorsement of NewDay USA products.
Recently, the CFPB found that NewDay USA gave borrowers misleading information about the costs of its cash-out refinances. In particular, NewDay USA included only the principal and interest payments on disclosures for the “new loan” payment amount provided to consumers. It then presented the payments of new loans to old ones, including the principal, interest, taxes, and insurance, making the new loans seem cheaper. However, many of these refinanced loans actually cost more. Between 2018 and 2020, they misled borrowers with this comparison in at least 3,000 cash-out refinances in North Carolina, Maine, and Minnesota.
According to the CFPB, NewDay USA violated consumer financial protection laws, including engaging in unfair, deceptive, or abusive acts or practices. NewDay USA was thereby ordered to:
Pay a $2.25 million penalty to the CFPB’s victims relief fund; and
Stop misrepresenting mortgage loan costs with misleading side-by-side comparison worksheets.
Read the CFPB’s press release here.
The consent order can be found here.
