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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.

The Federal Housing Finance Agency has reported that U.S. house prices rose 5.7 percent between the second quarter of 2023 and the second quarter of 2024, according to the second quarter FHFA House Price Index. House prices were up 0.9 percent compared to the first quarter of 2024. FHFA’s seasonally adjusted monthly index for June was down 0.1 percent from May.

“U.S. house prices saw the third consecutive slowdown in quarterly growth,” said Dr. Anju Vajja, Deputy Director for FHFA’s Division of Research and Statistics. “The slower pace of appreciation as of June end was likely due to higher inventory of homes for sale and elevated mortgage rates.”

The OCC has announced community bank director and senior management workshops scheduled in nine cities across the country in September and October. The list includes the OCC's basic Building Blocks workshop and its Risk Management Series, which includes workshops on Risk Governance, Credit Risk, Operational Risk, Compliance Risk, and Capital Markets.

Most of the sessions are available for both in-person or virtual attendance.

The CFPB yesterday posted a Bureau Blog article, "What we're learning: Medical debt's impact on Alaska Native communities."

The CFPB has made available its beta platform for the small business lending data collection rule under section 1071 of the Dodd-Frank Act and invites the participation of financial institutions and their technology partners to test the beta platform and share feedback with the CFPB on their experience. Participants will be provided the opportunity to create a Login.gov account, upload sample data test files, review validation results, and explore the beta platform's features. Feedback on the experience will help the Bureau identify areas for potential enhancement and improve the data filing process. Teams can work in an early test environment at their own pace and convenience.

The beta program is for testing purposes only. Data submitted on the beta platform will not be considered for compliance with small business lending data reporting requirements. Test files to be used can be found in the Bureau's test file repository. Participants are welcome to test using other sample files; however, it is important that they do not use actual customer data.

• Beta program access
• Getting started with the beta platform

The FDIC has issued FIL-59-2024 with guidance intended to provide regulatory relief to financial institutions and facilitate recovery in areas of Vermont affected by the severe storm, flooding, landslides, and mudslides from July 9 – 11, 2024. The initial designated areas include Addison, Caledonia, Chittenden, Essex, Lamoille, Orleans, and Washington Counties. FEMA may change the list of affected counties after damage assessments are completed.

The Small Business Administration has published [89 FR 68090] an interim final rule lengthening the required records retention for lenders that made loans under the Paycheck Protection Program (PPP) to ten years. This interim final rule harmonizes the PPP lender records retention requirements with subsequent legislation extending the statute of limitations for criminal charges and civil enforcement actions for alleged PPP borrower fraud to ten years after the offense. The rule became effective yesterday. August 22, 2024.

The rule applies to all PPP lender loan records. This includes PPP loan applications that were withdrawn, approved, denied or cancelled, and all other PPP lender loan records for PPP loans with an outstanding balance, PPP loans that have been forgiven, and PPP loans that are in repayment or have been paid in full by the borrower as of August 22, 2024. However, to the extent that a federally regulated PPP lender destroyed any PPP loan records before the effective date of this rule in accordance with a general internal records retention policy that was acceptable to the PPP lender's federal regulator, SBA will not enforce compliance by that federally regulated PPP lender with respect to the PPP loan records that were destroyed before August 22, 2024.

The Federal Housing Finance Agency yesterday announced a proposed rule that would establish the housing goals for 2025-2027 that Fannie Mae and Freddie Mac (the Enterprises) would be required to meet on an annual basis. FHFA is requesting comments on all aspects of the proposed rule during the 60-day public comment period.

The housing goals ensure that the Enterprises, through their mortgage purchases, responsibly promote equitable access to affordable housing that reaches low- and moderate-income families, minority communities, and other underserved populations. For the single-family housing goals categories, the Enterprises must meet the benchmark level established in the final rule or meet the actual market level determined retrospectively for the year based on Home Mortgage Disclosure Act (HMDA) data.

The proposed rule would establish a new process for evaluating compliance with the housing goals. Under the current regulation, if an Enterprise fails to meet a feasible housing goal, FHFA may require the Enterprise to submit a housing plan describing the steps that it will take to improve its performance. The proposed rule would provide that FHFA will not require a housing plan if the Enterprise’s performance met the level required by newly-defined Enforcement Factors. These Enforcement Factors address, in part, the uncertainty in forecasting the market several years in advance as well as the time lag in determining the actual market level retrospectively.

The Federal Housing Finance Agency yesterday announced that Fannie Mae and Freddie Mac (the Enterprises) are issuing updates to the Private Mortgage Insurer Eligibility Requirements (PMIERs) – the financial and operational standards that private mortgage insurance companies must meet to provide insurance on mortgage loans acquired by the Enterprises.

The updated standards will be implemented through a 24-month phased-in approach, with a fully effective date of September 30, 2026.

• Fannie Mae PMIERs Update
• Freddie Mac PMIERs Update

The CFPB reports it has ordered Fay Servicing LLC to pay a $2 million penalty for violations of mortgage servicing laws, as well as for violations of a 2017 agency order that addressed its illegal foreclosure practices. The company failed to implement the order’s requirements and continued to break the law. Fay Servicing took prohibited foreclosure actions against borrowers requesting mortgage assistance, failed to offer borrowers mortgage assistance options available to them, and overcharged for private mortgage insurance. In addition to the civil money penalty, the CFPB’s order requires Fay Servicing to pay consumer redress of $3 million and to invest $2 million to update its servicing technology and compliance management systems. The order also puts compensation limits on Edward Fay, the company’s Chairman of the Board and Chief Executive Officer (CEO), if Mr. Fay does not take actions necessary to ensure compliance with the order.

In 2017, the CFPB took action against Fay Servicing for failing to provide mortgage borrowers with the protections against foreclosure that are required by consumer financial protection law. The CFPB found that the company kept borrowers in the dark about critical information about the process of applying for foreclosure relief. The CFPB also found instances where the servicer illegally launched or moved forward with the foreclosure process when borrowers were actively seeking help to save their homes. The CFPB ordered Fay Servicing to stop its illegal practices and to pay $1.15 million to harmed borrowers.