Sterling Bank & Trust Still Remains Under Criminal Investigation By Department Of Justice And The SEC

Sterling Bank & TrustThe Comptroller of the Currency (OCC) on Tuesday said it has imposed a $6 million fine on Sterling Bank & Trust FSB. The OCC alleges the bank originated mortgage loans for about eight years using false or fraudulent information.

The OCC and Sterling Bancorp Inc. announced the civil money penalty as part of a consent order.

Under terms of the consent order, the bank neither admits nor denies the allegations made by the OCC.

The OCC said the civil penalty is based on violations of state and federal laws. It is also based on unsafe or unsound practices related to the bank’s Advantage Loan Program (ALP). The ALP program was a low-document mortgage loan program the bank offered between 2011 and December 2019. 

According to the OCC, Sterling Bank originated numerous ALP loans that were based on false or fraudulent loan information. It also found underwriting deficiencies and violations of federal Bank Secrecy Act/Anti-Money Laundering regulations related to the program.

OCC Alleges A Plethora Of Issues With Sterling Bank & Trust 

According to the consent order, Sterling Bank originated numerous ALP loans that had false or fraudulent loan applications. These loan applications contained falsified applicant income and employment information. They also contained inaccurate DTI ratios and falsified documents.

In addition, the order states, “loan documents failed to disclose the use of third-party mortgage brokers. Despite deficiencies within the ALP, the bank did not take appropriate corrective action and continued to grow the ALP.”

The order also states the bank failed to make a reasonable determination of applicants’ ability to repay the loans. They also failed to ensure that documents used to verify applicants’ claims were  reliable and obtained from third parties.

The bank also failed to disclose the payment to third-party mortgage brokers.  The bank also made false representations about the ALP loans and concealed information from the Federal Home Loan Bank of Indianapolis.

The consent order did not state how many loans were fraudulently approved over the eight year period. 

In its statement, the bank said both the parent company and the bank remain under criminal investigation by the DOJ and the SEC. 

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