BYL Bancorp to Buy Back Suspicious Loans
BYL Bancorp, the holding company for BYL Bank Group, said Tuesday that it must repurchase allegedly fraudulent mortgage loans originated by nonemployees and sold to investors, resulting in a first-quarter charge of as much as $1.7 million.
The alleged fraud was complex and involved more than 30 persons, including at least 13 businesses run by developers, real estate agents, appraisers, brokers and others, the Orange-based company said in a press release.
No company or bank employee was involved, BYL said, but the company did not say whether state or federal regulators are investigating its allegations. It did say that it would “vigorously pursue all possible remedies.”
Under terms of the loan sales to investors, BYL must buy back the tainted loans. But the company said it expects to make a substantial recovery on the mortgages.
Meantime, the loss will reduce earnings to about break even for the quarter, the company said. In last year’s first quarter, BYL lost $260,000, or 10 cents a share.
BYL did not say whether the alleged fraud would affect its pending acquisition by PBOC Holdings Inc. The deal is subject to regulatory approvals and the approval of BYL shareholders at a special meeting scheduled for March 21.
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