Sterling Bancorp's expanded mortgage banking operation is new, but the $653 million-asset company is pinning its hopes on one of its old formulas - lending to borrowers with poor credit.

Mark Sussman, a veteran of 15 years in mortgage banking and secondary markets who heads up the operation, said that Sterling will be able to offer mortgages to more customers through a combination of lower rates and pricing.

"We decided to make a pretty big splash in the market" with pricing among the lowest now being offered, he said.

The revamped mortgage banking unit, whose formation was announced last week, will include Richmond, Va.-based Sterling Industrial Loan Association, formerly Security Industrial Loan Association. Sterling Industrial originates and services first and second mortgages on residences throughout Virginia.

"We are doing traditional lending," Mr. Sussman said, but the company's reach includes borrowers with poor credit. "We've been doing it for over 40 years and have had a tremendous amount of success."

Mr. Sussman dismissed the perception that the current rise in long-term interest rates and a decline in origination volume might dictate some retrenchment on the part of lenders.

"Look at 1993, with $1.1 trillion to $1.2 trillion in volume. That was a real anomaly," he said. "If you take the historic numbers and go back 10 years and track it that way, you discover that lenders do somewhere between $600 billion and $700 billion a year.

Mr. Sussman came to Sterling in December from Anivan/Arbor National Mortgage Corp., where he had been director of portfolio services.

Before that, he was executive vice president of First Federal Financial Services Corp., Rutherford, N.J. He now is vice president of both Sterling National Bank and Trust of New York and Sterling Industrial Loan.

A primary goal is to expand Sterling's share in the retail and wholesale acquisition of residential mortgages and in the development and acquisition of mortgage-loan portfolios and new entities.

"We're business to business," Mr. Sussman said. Although Sterling deals with consumers through its retail operations, he pointed out, "the thrust of our direction now is in the wholesale format," dealing with originating entities such as mortgage bankers, banks, commercial institutions, credit unions, pension funds, and the like.

The bank would not disclose its origination or servicing volume, but Mr. Sussman projected that it would "quadruple originations" during the next 12 to 18 months. Its focus will be on securitization aspects, he said, which allows more competitive pricing.

"As a secondary marketing individual, I have to look at what's the best execution on every pool that I develop," Mr. Sussman said. "If the market is more conducive for me to sell to a conduit, I will do that. If it's more appropriate to securitize, I will do that."

Louis J. Cappelli, Sterling Bancorp's chairman and chief executive, said the new and expanded mortgage banking group would "broaden Sterling's opportunities to build mortgage activities" in metropolitan New York, Virginia, nationwide, and especially in the $625 billion secondary mortgage market.

Sterling has an office in Richmond, Va., specifically for processing, underwriting, and quality control of retail and wholesale loans.

Mr. Wiggins is a freelance writer based in New Jersey.

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