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ARTICLE · 25 FEBRUARY 2015

Bad Day For NewDay: CFPB Section 8 Enforcement Continues

Morrison Foerster
Morrison Foerster
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Under Section 8, a person is prohibited from accepting "any fee, kickback, or other thing of value pursuant to any agreement or understanding, oral or otherwise" in exchange for referring any real estate settlement business.

United StatesFinance and Banking
Donald Lampe
Donald Lampe
Joe Rodriguez
Joe Rodriguez
Ashley Hutto-Schultz
Ashley Hutto-Schultz
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On February 10, 2015, the Consumer Financial Protection Bureau ("CFPB") added another company to its litany of alleged Real Estate Settlement Procedures Act ("RESPA") Section 8 offenders Lighthouse Title, PHH Corporation, Stonebridge Title, Fidelity Mortgage Corporation). In its Consent Order ("Order") against NewDay Financial, LLC ("NewDay"), the CFPB claimed that the company violated Section 8's prohibition against kickbacks by paying "licensing fees" and "lead generating fees" in exchange for referrals from a non-profit organization that serves veterans ("Veterans Organization"). As a result of the alleged violations, the CFPB ordered NewDay to pay a $2 million civil money penalty and to submit a compliance plan detailing steps the entity will take to address each allegation contained in the Order. Moreover, NewDay will undoubtedly suffer severe reputational harm due to the alleged injury to veterans. In addition, the CFPB increased its oversight of NewDay's

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