COO ordered to resign from NewDay Financial

by MPA14 Apr 2015
The bad news keeps coming for Maryland-based NewDay Financial. The non-bank mortgage lender, which is already 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.


  • by C M P | 4/14/2015 9:08:04 AM

    Well the CFPB should get busy then, cause' many "MLO's" cheat on their licensing or don't meet the required licensing test hours necessary to really be a MLO. Such as many in Western NY MLO's...a group goes into a "classroom" sit there for a little less than 4 hours, put their "Time in" (the room) and the entity offering the "testing" makes (false) statement that you (the MLO) was in the room for 11 hrs, etc and now meet MLO Lic. requirements. I for one who pay a lot of money for testing and spend hours meeting the actual requirements for licensing is sick of this scenario of those who "skirt the system."

    So I guess we need to do what should have been done years ago, lets got back to the SAFE Act and make some changes to the small stuff instead of changing over and over again what doesn't need to be fixed, "over improved upon" over thought, etc...There should be per state only a small amount of education centers that meet the CFPB requirement to MLO testing. It's a free for all out there.


Should CFPB have more supervision over credit agencies?