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» VISIT US ONLINE @ DSNEWS.COM 79 IN THE NEWS CFPB Fines Nonbank Lender $2 Million for Deceptive Mortgage Advertising, Kickbacks e Consumer Financial Protection Bureau (CFPB) announced it levied a $2 million civil penalty against Maryland-based nonbank mortgage lender NewDay Finan- cial for deceptive mortgage advertising and kickbacks. According to CFPB, NewDay deceived consumers by failing to disclose its financial relationship with a veterans' organization in direct mail advertising materials. e primary business of NewDay, which is owned by a private company, Chrysalis Holdings, is originating refinance mortgage loans guar- anteed by the Veterans Administration (VA) made available exclusively to service mem- bers, veterans, and their surviving spouses. NewDay advertises primarily through direct mail campaigns, having solicited ap- proximately 50 million consumers through the mail in a three-year period from 2011 to 2014. According to CFPB, NewDay entered into a marketing agreement with a veterans association facilitated by a broker company and agreed to pay "lead generation fees" to both organizations, as well as a licensing fee to the broker company. is marketing agreement earned New- Day the HED of "exclusive lender" for that particular veterans' association, but NewDay stated in its advertising materials that the HED was based on high service standards and excellent value without disclosing its financial relationship with the veterans' organization. According to CFPB, NewDay's failure to disclose this financial relationship constituted a deceptive act or practice, which is a violation of the Dodd-Frank Wall Street Reform Act of 2010. "NewDay profited from the trust that veterans place in their veteran service orga- nization," CFPB Director Richard Cordray said. "Veterans, and any consumers getting a mortgage, deserve honest information about lender endorsements." Also, NewDay's direct mail advertise- ments contained recommendations from the veterans organization urging its members to use NewDay's products. ese recommenda- tions by the veterans organization as well as referral activities through the telephone and the Web constituted a referral of settlement business, according to CFBP. e payments NewDay made to the veterans organization and the broker company for these activities constituted illegal kickbacks, a violation of the Real Estate Settlement Procedures Act (RESPA). As a result of the violations of the Dodd- Frank Act, NewDay will terminate its rela- tionships with both the broker company and the veterans organization. In addition to pay- ing a $2 million civil penalty to the CFPB's Civil Penalty Fund, NewDay will also end deceptive marketing practices, end deceptive endorsement relationships, and cease making payments for referrals. Massachusetts RANK: 23 90+ Day Foreclosure Unemployment Delinquency Rate Rate Rate NOVEMBER 2014 2.98% 1.53% 5.5 YEAR AGO 3.56% 1.86% 7.1 YEAR-OVER-YEAR CHANGE -16.2% -17.7% -1.6 Top County FRANKLIN COUNTY 90+ Day Foreclosure Delinquency Rate Rate NOVEMBER 2014 5.23% 3.49% YEAR AGO 5.63% 3.45% YEAR-OVER-YEAR CHANGE -7.1% 1.2% Top Core-Based Statistical Area GREENFIELD TOWN, MA 90+ Day Foreclosure Delinquency Rate Rate NOVEMBER 2014 5.23% 3.49% YEAR AGO 5.63% 3.45% YEAR-OVER-YEAR CHANGE -7.1% 1.2% note: The 90+ day delinquecy rate is the percentage of outstanding mortgage loans that are seriously delinquent. The foreclosure rate is the percentage of outstanding mortgage loans currently in foreclosure. State rank is based on the November 2014 foreclosure rate. All fi gures are rounded to the nearest decimal. The unemployment rate refl ects preliminary November 2014 fi gures released by the Bureau of Labor Statistics. All other data courtesy of LPS Data & Analytics. IN THE NEWS Four Banks Reach $2.7 Million Settlement with Massachusetts AG Over Foreclosure Violations Four national banks agreed to pay a combined $2.7 million in penalties to resolve claims that they unlawfully foreclosed on properties in Massachusetts, according to an announcement from Massachusetts Attorney General Martha Coakley. Bank of America, Citi, JPMorgan Chase, and Wells Fargo were accused of violat- ing Massachusetts foreclosure laws and the Massachusetts Consumer Protection Act by foreclosing on properties in the Common- wealth when they did not hold the rights to the mortgages and therefore did not legally have the right to foreclose. In addition to paying the monetary penal- ties, the four banks will undertake obligations to facilitate the repair of defective property HEDs. "Our continued work to address illegal foreclosures in Massachusetts plays an impor- tant role in ensuring liquidity in our housing market and providing relief to homeowners who purchased properties with defective HEDs," Coakley said. "is settlement holds these four national banks accountable for violating state law and cutting corners in the foreclosure process." e Massachusetts AG office alleges in the amended complaint that the four banks ignored a fundamental legal mandate estab- lished in the Supreme Judicial Court's Ibanez decision in January 2011 that mortgagees must strictly comply with the Common- wealth's foreclosure laws. e Massachusetts foreclosure law states that a mortgage is void if whoever initiates the foreclosure does not hold the mortgage through valid assignment or is not the mortgagee of record at the time the foreclosure notice is published. e complaint further alleges that the four banks did not obtain a valid assignment of the mortgage prior to publishing foreclo- sure notices on the properties and therefore the foreclosures should be invalidated. Also according to the complaint, the banks' actions adversely affected the marketability and insurability of HEDs to numerous properties Maryland's serious delinquency rate was 5.8 percent in December 2014, 1.7 points higher than the national average of 4.1 percent for the month, according to CoreLogic. KNOW THIS

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