Coastway Community Bank, formerly known as Coastway Community Credit Union, has been the victim of a multimillion dollar mortgage fraud, according to the Rhode Island State Police.

The police have announced the arrests of two brothers, Dr. Timothy O'Brien of South Kingstown, R.I., and Eugene O'Brien of Westport, Mass., for the alleged fraud.

The police said they had been tipped in August 2010 to the alleged mortgage fraud which allegedly took place in late 2006.  The police charged that the two brothers used fraudulent means to obtain mortgage financing worth $2.4 million on a property in Narragansett, R.I., that had been appraised for merely $910,000.

The property was later foreclosed at $850,000 and later sold to an investor for $610,000, the police said.

Mortgage documents obtained in the course of the investigation showed that Coastway Credit Union provided $2.28 million of the $2.4 million.

Coastway began life in 1920 as “the Telephone Workers' Credit Union,” according to the bank, and converted to a mutual bank charter in July 2099.

Neither the police nor the bank has become available to take questions about the alleged fraud.