“NewDay USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans,” CFPB director Rohit Chopra said in a statement. “NewDay USA’s misconduct has no place in the VA home loan program.”
This alleged deceptive practice affected more than 3,000 cash-out refinances in states like North Carolina, Maine, and Minnesota, where these comparisons were used extensively.
The CFPB’s action is part of a broader effort to address concerns about “loan churning”, a practice where lenders push veterans to repeatedly refinance their VA loans, often resulting in higher costs. This practice has been scrutinized by the CFPB, the VA, and Ginnie Mae, the government-backed entity that guarantees VA loans.
In response to these practices, Ginnie Mae had previously limited NewDay USA’s ability to package and sell loans to investors, as part of broader efforts to protect veterans from financial harm.
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