regression??

My mother in law recently got a pomeranian pup. She has Cody, who is 5, and very well trained and housebroken. Cody is also a pom, but he is large for the breed, and was purchased at a pet store (not by her, the girl who bought him didn't want him anymore, so she took him)
Anyway, since the new baby has been in the house, she is training him with pee pads. Casey is learning, but now Cody is going in the house too, but not even on the pads, all over. He gets out plenty, but she doesn't know what is causing this.

Is it possibly some type of regression since the new pup is there?

Oh yeah, and does anyone have any suggestions on how to "fix" this problem??

Cody might be marking his territory since the new pup is there.

How well do they get along? Is Cody neutered? How long has the new puppy been in the house?

Hopefully once Cody gets used to Casey, he will stop. I would keep an eye on him and catch him in the act. When he starts to do it, clap your hands and take him outside.

If its not territorial marking, I would just start all over on the potty training.

I personally would stop letting the new pup go potty in the house even if it is on Pee pads. This sends mixed signals to Cody. Besides if the ultimate goal is to house train the dog then eliminate this other behavior of going in the house so it doesn't cause issues later.

I am not a fan of dogs being house trained on pee pads when there is access to taking them directly outsides.

I agree with Aly that Cody could be marking his territory because the scents are in the house. Marking territory outside is not a problem and is really quite common in male dogs. Especailly if they show alpha characteristics.

Bottom line.... get rid of the pee pads and train the pup to go outside from the get go!

Yes Cody is neutered, and I realize that he still will mark--my dog does sometimes. I don't know why she is using the pee pads, I had thought that was why Cody was using them also--kind of like "if he can do it, so can I"
I have always read that it is much harder to train a dog to go outside after using the pads or newspaper or whatever.
I will have to talk to her about it--he is a tiny dog, and taking him out doesn't require much effort, even though it is cold out.
I also know that sometimes pups can "learn" from an older dog in the house, whether it's good or bad, and in this case it will just continue to go around and around, I suppose.
She doesn't crate the new guy either, just blocks off her kitchen, maybe that is a problem too--I've tried to tell her to crate him, but I get, "he's so small, he can't hurt anything"