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NewDay Financial LLC has agreed to a $1 million settlement with the New York State Department of Financial Services (NYDFS) and will surrender its mortgage banker’s license to do business in New York after it was determined that its employees were part of an effort to cheat on state-required continuing education courses and exams.
The NYDFS charged that at least 20 New Day mortgage loan originators failed to take the mandated continuing education courses and exams, with the company’s compliance staff taking the required courses and exams for them. The cheating scheme involved the full knowledge and participation of the company’s executives, the NYDFS added.
“These exams are important because they help ensure that loan officers know and follow the law, and do not abuse homeowners,” said Acting Superintendent of Financial Services Anthony J. Albanese. “The type of dishonest conduct uncovered in this case is simply unacceptable and will not be tolerated in New York.”
The NYDFS also charged the company with compliance failures, including the improper issuance of sub-prime home loans and the misrepresentation of loan terms.
This is latest settlement by the Fulton, Md.-based company to charges of inappropriate business actions. In February, the Consumer Financial Protection Bureau (CFPB) fined NewDay $2 million for deceiving consumers about a veterans’ organization’s endorsement of its products and for its role in a scheme to pay kickbacks for customer referrals. In April, it agreed to a $5.2 million settlement with 43 state mortgage regulators related to cheating on originator testing.
Following the announcement of the settlement, NewDay issued a statement defending its reputation and its actions.
“Our borrowers, employees, and business partners know just how committed our leadership team is, and has always been, to ensuring everything we do at NewDay USA is done with the best interests of our nation’s Veterans in mind," the statement said. "As we already stated six months ago when this issue was first reported, as soon as we became aware of the wrongdoing, we initiated an internal investigation, self-reported the issues to our regulators and took aggressive steps to correct the mistakes and ensure they can never be repeated. We did all of these things because we have a responsibility to our nation’s Veterans to always act with integrity in everything we do. In fact, the vast majority of the issues raised by NYSDFS, with the exception of a few matters from an exam almost four years ago, were fully addressed and resolved six months ago as part of a previously announced comprehensive agreement with a 43-state coalition. Unfortunately, New York regulators have chosen to self-select certain historical issues rather than recognize the efforts made by the company to improve our operations. NewDay has used every resource at its disposal to continue to strengthen and build the company for the future. We not only stand by our management team, we are supremely confident in their ability and commitment to lead this company.”