B&B reveals £18m charge for mortgage fraud

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by Gill Montia

Bradford & Bingley’s (B&B) first-half results reveal that the UK’s biggest buy-to-let lender has been the victim of mortgage fraud that has resulted in an impairment charge of £18 million.

According to a report in The Times, details of the frauds have been exposed in the past six months but may relate to earlier accounting periods and police investigations are already underway.

The bank also said credit impairment charges for the six months to the end of June rose to £74.6 million, up from £5.3 million in the first half of last year.

The steep increase was largely as a result of a rise in the number of mortgages in arrears of three months or more.

B&B has plans to improve debt collection but anticipates that arrears will continue to rise throughout the remainder of 2008.

The bank will remain focused on the buy-to-let market but wants to improve the quality of its lending and expects volumes to be down until more favourable economic conditions return.

B&B’s new chief executive, Richard Pym, has said his priorities are to manage the bank’s mortgage arrears and increase its retail deposit base.

The bank posted a loss of £26.7 million for the six months to the end of June. The result compares with a pre-tax profit of £180.4 million in the same period of 2007.