Top Stories

The CFPB has announced it has taken action against repeat offender New Day Financial (NewDay USA) for deceiving active duty servicemembers and veterans seeking cash-out refinance loans. The CFPB found that NewDay USA gave misleading and incomplete cost comparisons to borrowers refinancing in North Carolina, Maine, and Minnesota, which made the company’s loans appear less expensive relative to their existing mortgages. The CFPB is ordering NewDay USA to pay a $2.25 million civil penalty to the CFPB’s victims relief fund.

New Day Financial, LLC is a non-bank direct mortgage lender headquartered in West Palm Beach, Florida, and specializes in offering mortgage loans guaranteed by the United States Department of Veterans Affairs (VA). The company currently operates under the brand NewDay USA, and uses patriotic imagery and other marketing tactics to build trust with military-connected families. Since at least 2015, NewDay USA has provided cash-out refinance loans to consumers, including veterans and active-duty servicemembers.

The CFPB said that NewDay USA gave borrowers misleading information about the costs of its cash-out refinances. Specifically, for the “new loan” payment amount listed on disclosures provided to consumers, NewDay USA included only the principal and interest payments. It then presented a side-by-side comparison of the “new loan” payment amount with that of the “previous loan” payment amount, which included principal, interest, taxes, and insurance. This made NewDay USA cash-out refinance loans appear less expensive relative to consumers’ original mortgages, but for many consumers the refinanced loans were more expensive. NewDay USA originated at least 3,000 cash-out refinances in North Carolina and Maine through 2020 and Minnesota through 2018, most of which included the misleading comparisons.

The CFPB previously took action against New Day Financial in 2015 for paying illegal kickbacks and deceiving borrowers about a veterans’ organization’s endorsement of NewDay USA products.

In an August 29 company statement, NewDay USA CEO Rob Posner said, “Today, after yet another exhaustive, government-funded investigation, the CFPB has unearthed nothing more than clerical errors that caused no financial harm to Veteran borrowers.... NewDay operates in 44 states and the District of Columbia. The CFPB claims involved only three of those states, and focused on a single type of disclosure that was accurately provided to these consumers on a half-dozen other federally mandated disclosures and closing documents.”

Editor's Note: This story first appeared on August 30, 2024. It has been revised to remove a reference to "loan churning," which the CFPB did not accuse NewDay USA of, and to include part of Mr. Posner's statement.