Buy-to-lety mortgage specialist Paragon has opened discussions with a number of Britain’s clearing banks to sign and service mortgages for them. Daily Telegraph

The lender, nearly bankrupted when its banks refused to renew a revolving £280m working capital facility last year, has had to put itself into “hibernation” because it cannot raise the funds for new lending. About a third of the workforce has been laid off and chief executive Nigel Terrington is looking for new business lines to generate extra profit.

He is believed to have held discussions with several high street banks, including Barclays, to originate and service new mortgages for them. Paragon is proposing to start by signing new buy-to-let loans but expects to move into prime mortgages. Paragon would be paid a fee for finding and servicing the customer, but the clearing bank would hold the loan on its books and check the customer’s creditworthiness.

Paragon believes it can provide banks access to new customer segments and would help them manage volumes.