Newday USA, which specializes in Department of Veterans Affairs-backed mortgages, gave consumers incorrect and incomplete information about housing costs that made the company's own refinances appear less expensive than the consumer's existing loans, the bureau claimed. The civil penalty against the West Palm Beach, Florida-based lender is for transactions in three states.

"Newday USA baited veterans and military families into cash-out refinance mortgages by hiding the true costs of these loans," said CFPB Director Rohit Chopra in a press release. "Newday USA's misconduct has no place in the VA home loan program."

The CFPB took issue specifically with Newday USA's presentation of payment calculations for cash-outs. The payment amount for a potential newly originated loan with the company listed only principal and interest payments on disclosures, the bureau said. When comparing a new refinance side by side with the homeowner's existing mortgage, though, P&I, taxes and insurance were included for the latter, thereby making Newday USA's own offer appear more affordable. In many cases, the refinance actually ended up costing the borrower more. 

The CFPB penalty comes after its investigation looked at approximately 3,000 loans originated in North Carolina, Maine and Minnesota through 2020, with mismatched comparisons present on most. 

Newday USA operates in 44 states and the District of Columbia and took issue with CFPB's characterization of the infractions. 

"Today, after yet another exhaustive, government-funded investigation, the CFPB has unearthed nothing more than clerical errors that caused no financial harm to veteran borrowers," said Newday USA CEO Rob Posner in a statement. 

But in an interview on The Big Picture webinar on Thursday, the bureau suggested the penalty only came after a repeated series of violations. 

"There's supervision, where we can handle routine mistakes and do it quietly and say, 'Just fix it.' Only when there's repeated violations — when they don't get it right — then it goes to enforcement," said Mark McArdle, CFPB assistant director, mortgage markets. 

"That is exactly the kind of practice that a good mortgage banker would never do," he said about the pricing disclosures claims.

Newday USA has a history of disputes with the CFPB. In 2015, the bureau also took action after accusing the company of misleading borrowers about endorsements it received at the time, a claim Posner also denied. 

"The agency decided to create a new law questioning our marketing partnership with the Veterans of Foreign Wars. It was unprecedented," he said.

The CFPB, VA and Ginnie Mae, which backs mortgages originated by government agencies, have raised ongoing concerns about loan churning, where lenders push veterans and military personnel to refinance. While lenders benefit from the new originations through collected fees and secondary market sales, homeowners may end up taking on higher housing costs through refinances that many don't need.

Ginnie Mae has cracked down on lending firms in the past, including Newday USA, over instances of loan churning, setting limits on secondary market sales for mortgages in question.