Category: Cash-Out Refinance Loans

Cash-Out Refinance Loans allow homeowners to replace their existing mortgage with a new one that has a higher principal amount, thus enabling them to withdraw the difference in cash. While this can be a useful financial tool, it can also be susceptible to fraud. For instance, fraudulent activities might involve inflating property values or borrower income to secure a larger loan amount than the borrower is actually entitled to. Some may falsify documents or use false identities to obtain the cash-out funds, leaving lenders at risk of significant financial loss and potential legal complications. Identifying and preventing such fraud requires diligent verification of property values and borrower information.

CFPB-PR-240829-1

Cash-Out Refinance Loans Categories CFPB CFPB-24 CFPB-2408 Companies in the News Federal News Sources Mortgage Churning Mortgages New Day Financial LLC Veterans and Military Families

CFPB-PR-240829-1 (Aug. 29, 2024)

CFPB Orders NewDay USA to Pay $2.25 Million for Illegally Luring Veterans and Military Families into Cash-Out Refinance Loans – NewDay USA’s deceptive tactics came amid VA home loan “churning” scandal

WASHINGTON, D.C. – The Consumer Financial Protection Bureau (CFPB) today took 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.

CFPB News Release - CFPB-PR-240829-1

CFPB-PR-240829-1

Date: Aug. 29, 2024

Accessed: Aug. 31, 2024

Source URL:  https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-newday-usa-to-pay-2-25-million-for-illegally-luring-veterans-and-military-families-into-cash-out-refinance-loans/

Categories:

PDF Notes:

  • The PDF viewer below disables the links inside the PDF file.
  • The PDF file may be downloaded if you wish.
  • All links within the PDF Download are fully functional.
CFPB-PR-240829-1