Organisations believed to have been conned include HBOS, Bradford & Bingley, Bristol & West and Lloyds TSB.
Fraud squad officers from Strathclyde police believe the amount involved could be as high as £3.2m.
A total of nine people have been arrested in the Glasgow area. Seven of them have appeared in court on fraud charges and, according to police, two more are set to follow. Four of the accused have also been charged with money laundering offences.
During two separate preliminary hearings before Glasgow Sheriff Court, it was alleged that HBOS and Bradford & Bingley had been defrauded out of a combined £450,000 and Bristol & West and Lloyds TSB out of as much as £2.8m between them.
It is alleged that the accused were using bogus identity documents and grossly exaggerating their earnings to get mortgages.
Bank accounts were then opened by gang members to receive the mortgage monies.
The court heard that multiple applications were made, with one man alleged to have made 17 different applications. Dozens of properties are thought to have been involved. The discrepancies were revealed when mortgage repayments were not met. The banks and building societies began to investigate the backgrounds of the app- licants and the police were called in.
When police raided the properties of the defendants, a total of over £175,000 in cash was discovered.
The cases against the accused, six men and two women, all in their 20s and 30s, now proceed to full trial.