Organised mortgage fraudsters cost troubled mortgage lender Bradford and Bingley (B&B) £18m in the first six months of the year

Bradford & Bingley,admitted yesterday that it had been forced to take an £18 million impairment charge in the half year to June 30 to cover borrowing by criminal gangs and other fraudsters. The sum represents an increase on a £15 million charge taken in June. B&B’s losses may be only the tip of the iceberg. The Association of Chief Police Officers has estimated the scale of mortgage fraud in the UK at £700 million a year, but many believe this to be conservative. Navigant, a consultancy that conducts forensic investigations, has estimated that British mortgage lenders could be sitting on at least £7 billion of fraudulent loans. B&B, which has 3 per cent of the mortgage market, is the first high street bank to disclose the size of its losses due to fraud. Rod Kent, its chairman, said that the bank had not been singled out and was no more vulnerable than other lenders. “We don’t think we are being selected, we are just being more transparent,” he said.
Organised mortgage fraudsters cost troubled mortgage lender Bradford and Bingley (B&B) £18m in the first six months of the year, contributing to a £26.7m loss for the bank. B&B’s first half result was well down on the £180.4m profit recorded in the corresponding period in 2007, with the lender struck by a £74.6m credit impairment charge this year - which includes the £18m fraud charge.Its balance sheet was also hit by an increased number of mortgages three months or more in arrears and a 5% deflation in regionally weighted house prices.The bank's restructured £400m rights issue and ownership uncertainty has weighed heavily on investors in recent months, with B&B’s share price currently more than 82% lower than its 52-week high.
Chairman Rod Kent says the firm, under new chief executive Richard Pym, has a strong enough capital base to operate effectively in the current economic conditions.“In the light of the turbulence in the banking and housing sectors, the first six months of this year have been very challenging for B&B,” he says.“Although we clearly signalled this at our announcement on 2nd June, the results for the half year are, of course, disappointing. “In the light of continuing weakness in the housing market and the wider economy, we continue to expect arrears and repossessions to increase for the remainder of the year, although we will be putting further resources into tackling the problem.”