A scheme to cheat on license exams has cost
New Day Financial LLC it’s license to do business in New York. The action follows a multi-state settlement.
The
Fulton, Md.-based company was already in hot water for cheating on license exams in other states — settling with multiple state regulators in April.
That settlement, announced by the
Multi-State Mortgage Committee, alleged that several employees completed continuing education requirements for others.
On Thursday, the
New York State Department of Financial Services announced that New Day, which does business as New Day USA, will surrender its mortgage banker’s license to do business in New York.
In addition, New Day
will pay a $1 million penalty to the department.
The state alleges that New Day’s
employees, including senior managers, participated in a widespread scheme to cheat on state-required continuing education courses and exams, among other violations of New York law.
At least 20 mortgage loan originators at the company didn’t
take the required continuing education courses and exams, according to the DFS. Instead, they had compliance staff take the required courses and exams on their behalf.
New Day’s
former head of licensing arranged for compliance staff to take the required continuing education exams on behalf of the originators.
There were multiple occasions when New Day originators allegedly provided the company’s former vice president of training information they learned from taking the Secure and Fair Enforcement for Mortgage Licensing Act exams.
In addition, originators allegedly took screen shots of questions included in approved continuing education courses for the Nationwide Multi-state Licensing System and Registry and shared them with senior management and other originators.
“The former senior vice president of the reverse division was aware that New Day MLOs took and shared screen-shots of materials included in the NMLS approved continuing education courses, and had personally received copies of these materials,” the announcement said. “And at least six other New Day senior managers participated in or had knowledge of some or all of the conduct described above.”
The former vice president of training is accused of encouraging originators to report back with information acquired while taking SAFE MLO licensing exams in order to update the company’s internal test preparation materials.
Even New Day’s chief executive officer and chief operating officer
had continuing education requirements completed on his behalf by other employees on at least eighteen occasions, according to the state.
In one case, the COO allegedly
asked a compliance staff member to take the required courses in his place.
Two of the senior managers that were ousted because of the scheme were reportedly rehired by New Day-parent
Chrysalis Holdings LLC.
The department additionally alleges that New Day
improperly issued subprime mortgages, misrepresented loan terms and failed to provide discount points notification. It also neglected to maintain a minimum line of credit and submitted a false volume of operations report.
