Bradford & Bingley is collecting rents directly from tenants of properties on which it has lent buy-to-let mortgages as a way of keeping its arrears and possessions under control.
The bank revealed last week that 2.3% of its mortgages are now three months or more in arrears, up from 1.48% in 2007, sending its provision for bad debts soaring to £75m in the first half of the year, more than 14 times the level in the same period of 2006.
The provisions, together with losses on its portfolio of so-called 'toxic loans' and a plunge in mortgage lending, helped push the bank into a £27m loss for the first six months of the year, compared with a £180m profit last time.
Chairman Rod Kent said last week that it was already working on its arrears management systems by recruiting extra staff - including a new head of collections - and identifying problem cases earlier.
The Observer
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