The Veterans of Foreign Wars (VFW), one of the nation’s most prestigious non-profit organizations serving the needs of retired military personnel, has been identified as the previously unnamed alleged recipient of kickbacks from NewDay Financial, a Fulton, Md.-based mortgage originator focused on the VA loan sector.
The Consumer Financial Protection Bureau’s (CFPB) highly publicized investigation of NewDay’s alleged practice of paying kickbacks for customer referrals included a major veterans’ organization. The CFPB would not openly identify the organization, but a report by Military Times confirmed that the VFW was the group in question. However, the CFPB is refusing to affirm this information is correct.
"As a general matter, the CFPB does not name third parties who have not been the subject of enforcement action," said CFPB Spokesman Sam Gilford.
Nonetheless, the VFW has openly identified NewDay Financial as its exclusive mortgage originator for the past five years, and the group confirmed to Military Times that the CFPB contacted it on Feb. 10 in connection to its investigation.
"As soon as we discovered that there was one scintilla of evidence to suggest that all statutory and regulatory requirements were not being met, we subsequently began taking the steps needed to sever the relationship with NewDay," said Jerry Newberry, VFW assistant adjutant general for operations.
The CFPB investigation has also uncovered a mortgage broker that reportedly also participated in the kickback scheme. That entity is also not being identified by the bureau. Neither the broker nor the VFW is under threat of CFPB actions, but NewDay Financial is being pegged by the Bureau to pay a $2 million penalty.
“There has never been any allegation or suggestion that the company's actions ever directly harmed our borrowers,” said NewDay Financial in a corporate statement. “We will continue our tireless efforts to serve veterans in the dignified manner they deserve.” the statement said.
