A Southfield, Mich., bank that was the focus from 2022-24 of numerous enforcement actions, including prohibitions of employees associated with a risky loan program, will be acquired by a Florida banking company, the Federal Reserve said Friday.
In a release, the Fed said EverBank Financial Corp. (EFC), of Jacksonville, Fla., is approved to acquire Sterling Bank and Trust, FSB, of Southfield, Mich. According to the Fed, Sterling holds total assets of about $2.4 billion. EFC holds total assets of $40.8 billion, making it the 61st largest insured depository organization in the U.S.
From 2022 to 2024, Sterling was the target of numerous enforcement actions related to its Advantage Loan Program (ALP), which the Office of the Comptroller of the Currency (OCC) described as a “low-document residential loan program … that presented high risks for fraud, money laundering, and lending misconduct and therefore required strong monitoring and controls.” However, the OCC found that the program was not robustly monitored.
The OCC has reported that the ALP was the bank’s primary loan product during an eight-year period ending in December 2019.
Between 2023 and last year, at least five executives at Sterling associated with the ALP were prohibited from future service in a financial institution by the OCC. Several of the bank employees were also fined. At least one, Hao Liang “Frank” Hu, who formerly worked for Sterling, in April 2022 pleaded guilty to a federal charge of conspiracy to commit bank fraud and wire fraud.
According to the OCC, Hu in 2022 signed a plea agreement that stated he engaged in a widespread conspiracy to engage in a sophisticated bank and wire fraud scheme centering on the ALP. The OCC said then that, according to the plea agreement, Hu earned $2,519,488.98 in commissions primarily earned through the origination of the fraudulent loans.
From 2022 to 2024, the bank was assessed at least $6 million in penalties for originating false or fraudulent mortgage loan applications.
Over the eight-year period that the program was in place at Sterling, the OCC alleges, the bank: falsified applicants’ employment and income information as well as other supporting loan documents; failed to make a reasonable and good faith determination of applicants’ ability to repay and to ensure that documents used to verify applicants’ employment, income, and assets were obtained from third parties, were reasonably reliable, and that there were proper quality control mechanisms to ensure the accuracy and reliability of the bank’s loan documents; and failed to properly disclose the involvement of, or fees paid to, third-party mortgage brokers on loan estimates and closing disclosures. The OCC said then that the bank’s actions violated various state and federal laws.
The acquisition will be effective March 15, but must be completed by three months after that date, the Fed said.
Federal Reserve Board announces approval of proposal by EverBank Financial Corp
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