By Katalina M. Bianco, J.D.
Mortgage regulators from 43 states have entered into a settlement agreement with nonbank mortgage lender New Day Financial, LLC d/b/a NewDay USA on charges that the lender impermissibly shared test information for mortgage professionals. The regulators also charged that several New Day employees completed continuing education requirements for numerous other New Day employees. The company has agreed to pay $5, 280,000 in administrative penalties to settle the charges.
The charges came as a result of an examination by the state of New Hampshire and a subsequent investigation conducted by the Maryland Commissioner of Financial Regulation. The Multi-State Mortgage Committee (MMC) started an investigation into the charges, “identifying a pattern of inappropriate conduct” by New Day and negotiated the settlement agreement between the state regulators and the company. Karyn Tierney, Chair of the MMC and Deputy Commissioner of the Arkansas Securities Department, said the resolution of the case would “permit the company to continue to operate while ensuring compliance with all state and federal laws.”
This is not the first time New Day has found itself on the receiving end of charges by a regulator. In February of this year, the Consumer Financial Protection Bureau entered into a settlement agreement with the company for deceptive mortgage advertising aimed at veterans and a scheme to pay kickbacks for customer referrals. New Day agreed to pay $2 million to settle the bureau’s charges.
In addition to the monetary penalty, the current settlement agreement and consent order provides for the removal of New Day’s Chief Operating Officer and the hiring of an independent auditor to evaluate New Day’s policies and procedures, and review New Day’s training and education program. New Day also must issue a report within 270 days identifying the steps the company proposes to take to improve its corporate management and governance structures.
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