FORT LEE, Va. (April 16, 2015) -- On Feb. 10, the Consumer Financial Protection Bureau ordered NewDay Financial, LLC to stop its deceptive marketing, end its illegal kickbacks and pay $2 million in civil penalties for deceiving consumers about a veterans’ organization’s endorsement of NewDay products. The CFPB held that NewDay violated the federal Consumer Financial Protection Act by engaging in unfair, deceptive, or abusive acts or practices.

NewDay, a nonbank mortgage lender headquartered in Fulton, Md., primarily deals with originating home loans guaranteed by the Veterans Benefits Administration. Its loans are made available exclusively to servicemembers, veterans and eligible surviving spouses. CFPB found that NewDay entered into a marketing relationship with a veterans’ organization in 2010, and as part of that arrangement, the mortgage lender made regular undisclosed payments to the veterans’ organization.

In some of its advertisements, NewDay described itself as the “exclusive” lender for the veterans’ organization because of its focus on helping veterans and its high standards of service.

NewDay failed to disclose to its customers, however, that it was making regular payments to the veterans’ organization for its endorsement. CFPB held that NewDays’ failure to disclose its payment arrangements to its customers was a deceptive act in violation of the Consumer Financial Protection Act.

CFPB further determined that NewDay’s payments to the veterans’ organization constituted illegal kickbacks in violation of the Real Estate Settlement Procedures Act. NewDay is ending its relationship with the veterans’ organization, according to the CFPB report.

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– Porter is a client services attorney with the Office of the Staff Judge Advocate, U.S. Army Combined Arms Support Command