in trouble with the Consumer Financial Protection Bureau (CFPB) over its business practices
, has agreed to dismiss its chief operating officer and pay nearly $5.3 million over allegations it allowed employees to cheat on mortgage originator license testing.
Multi-State Mortgage Committee (MMC) recently announced a settlement agreement and consent order between 43 state mortgage regulators and New Day Financial. The case arose as a result of an examination by the state of New Hampshire, followed by an investigation by the Maryland Commissioner of Financial Regulation.
According to MMC, the case included the sharing of test information for mortgage professionals
as well as the practice of several NewDay employees completing continuing education requirements for numerous other NewDay employees.
“The MMC coordinated the investigation of this matter, identifying a pattern of inappropriate conduct, and negotiated, on behalf of the participating state regulators, a resolution that will permit the company to continue to operate while ensuring compliance with all state and federal laws,” Karyn Tierney, chair of the MMC and deputy commissioner of the Arkansas Securities Department, said.
The MMC order includes:
- The removal and replacement of New Day’s Chief Operating Officer, Paul Alger
- The hiring of an independent auditor to evaluate NewDay’s policies and procedures and review NewDay’s training and education program to determine if additional remedial action is necessary to supplement the changes already implemented. The auditor is to report back to the MMC within 270 days after being retained, with a follow-up report 270 days thereafter;
- A report from NewDay within 270 days identifying the manner in which the company proposes improving its corporate management and governance structures, with an eye to best business practices for a mortgage company of its size and scope of business
- The $5.28 million administrative penalty
Mortgage regulators from the following states participated in the agreement: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming and the District of Columbia.
In February, the CFPB took action against NewDay for deceptive mortgage advertising and kickbacks
. According to the agency, NewDay deceived consumers about a veterans' organization’s endorsement of NewDay products and participated in a scheme to pay kickbacks for customer referrals. NewDay will pay a $2 million civil money penalty for its actions.
Click here to view a copy of the MMC settlement agreement and consent order.
The bad news keeps coming for Maryland-based NewDay Financial. The non-bank mortgage lender, which is already