The multi-million pound scam was carried out over a period spanning from 2002 to 2008, at the height of the property boom.
The aim of the scheme was to cash in on the boom in the hope that with easy profits, the loans would be repaid without the bank discovering they were fraudulent, with the bank manager and his co-accused benefitting financially.
Disgraced former bank manager Peter Creegan, 47, who used his position in the Newry branch of the First Trust Bank to commit the offences, was described in court as the "prime mover" and was handed a three-year prison sentence.
The father-of-three will spend two years in custody followed by a 12-month period of post-custodial supervision.
His co-accused - 51-year-old Peter Brassil from Chancellor's Road in Newry and father-of-five Damien Pius Mallon, 56, from Drumconwell Road in Armagh - will both spend a year in custody.
When he is released, Brassil will spend a further 12 months on post-custodial supervision.
Creegan, 47 and from Newry's Liska Manor, admitted 18 offences which include fraud by false representation, seven counts of theft, obtaining services by deception, two counts of fraud by abuse of position, false accounting, removing criminal property, conspiracy to obtain a money transfer and fraud by false accounting.
Newry Crown Court, sitting in Belfast, heard that Creegan was involved in six loans and a number of fraudulent mortgage applications amounting to £3.34m, with an estimated loss of between £1.34m and £1.14m.
His modus operandi was to create false documentation to support applications for loans from the bank - sometimes using false names.
Mr Justice Burgess said Creegan's offending was motivated by greed and highlighted the amount of money involved, the breach of trust and the impact the criminality had on his victims.
He sat at the centre of this web of deceit, given his indispensable power to process the loans and to grant or obtain the necessary approval. He was in control from beginning to end.
Judge Justice Burgess jailing Peter Creegan
Brassil pleaded guilty to nine offences namely entering an arrangement to acquire criminal property, false accounting, three counts of theft, fraud by false representation, two counts of conspiracy to obtain a money transfer and fraud by false accounting.
The former solicitor - who at the time of the offending was addicted to cocaine - is a former partner in Tiernan's solicitor's practice in Newry.
He was involved in six loans amounting to £3.07m, which resulted in an estimated loss of between £1.35m and £1.42m.
He was also involved in the theft of £28,500 from clients' funds.
Mr Justice Burgess said Brassil was involved in two separate aspects of dishonestly - his involvement in Creegan's schemes and stealing from his clients.
Saying Brassil suffered from low self-esteem, the judge said it was this that played a significant role in allowing himself to be drawn into Creegan's schemes.
The Judge also told the court he had "no doubt that the abuse of cocaine played a major part in clouding his judgement".
Mallon pleaded guilty to seven charges - two counts of theft, concealing criminal property, two counts of transferring criminal property, obtaining services by deception and false accounting.
The former financial advisor's offending involved money laundering and submitting false information on a mortgage application.
He was involved in three loans amounting to £386,000 - one in 2006 and two in 2008.
Saying Mallon's pleas "do not represent a robust statement of remorse", Mr Justice Burgess told the court the accused claimed he was 'vulnerable' to Creegan's plans due to a significant overdraft and the need to keep on good terms with his then bank manager.
After Mallon stated he believed Creegan was above board, the Judge said: "At best this was naivety, at worst it is an attempt to turn his back on his own responsibilities."
Brassil's defence team made submissions on his behalf when the case was opened last Friday.
Representing Creggan, defence barrister Patrick Lyttle QC said the former bank manager became involved in the criminality through greed "for the purpose of trying to support his family and put by a nest egg".
Mr Lyttle said that during the property boom, Creggan saw for himself how "fortunes were being made overnight", and believing this was an easy way to make money, Creggan believed he could get involved and no-one would get hurt - a move described by the defence barrister as "a cardinal error".
Describing Creggan as a "broken man", Mr Lyttle spoke of the "shame and embarrassment" he brought upon his family by his "spectacular fall from grace".
Saying this man of previous impeccable character was now unemployed and suffering from severe depression, Mr Lyttle said Creggan and his co-accused initially believed their actions would lead to "some form of El Dorado".
Mr Lyttle also told the court that since his arrest almost five years ago, Creggan "has lost virtually everything", but fully accepted the breach of trust.
The barrister representing Mallon, Paul Ramsey QC, described his client's role as a facilitator, saying the consequences of Mallon's actions have had a "cataclysmic for him and his family", resulting in the loss of his livelihood as well as his "good name and reputation".
Mr Ramsey told that court that his client "fully accepts it is something he should not have involved himself in", and spoke of the "severe breach of trust".
Each defendant used their respective positions of trust to obtain loans to buy land or properties in Armagh and Louth between 2002-2008 when the property boom was at its height. These were sophisticated and well planned frauds which involved serious breaches of trust.
DCI Todd Clements
More than 100 police officers conducted a series of searches in 2009 in south Armagh to recover documents and other materials, which took 30 detectives a month to catalogue, as part of the investigation codenamed Operation Radix.
The officer in charge, Detective Chief Inspector Todd Clements, said: "Our investigation began in 2008 when we were advised by First Trust Bank about irregularities at its Newry branch.
"This marked the start of a massive investigation centred on three suspects and their activities in submitting, processing and sanctioning loans and mortgages. Loans were applied for using either bogus identities or the names of individuals who had no knowledge of the applications.
"This was a huge money laundering scam using interest-only loans which involved a severe breach of trust. The principal victim was the First Trust Bank which has suffered a significant loss.
"But there are other victims, private individuals whose identities have been protected by the court, who have suffered a devastating impact on their lives as a result of the criminality perpetrated by these professional individuals."
DCI Clements continued: "My officers have worked for years on this investigation, following a complex international trail of documents, false identities and undisclosed companies to build a case and liaise with colleagues in the Public Prosecution Service to bring this complex issue to a successful conclusion in court.
"Organised Crime Branch will pursue any individual, regardless of their professional standing, if they are involved in organised crime. Today's sentencing marks the latest stage in our investigation. These defendants have been the subject of financial restraint orders for a number of years and we will now be seeking confiscation orders to recover some of the money stolen from victims."