The Abbey National has been rocked by allegations that it is using underhand tactics to force people into paying repossession debts.
The Sun newspaper says that Abbey has launched a campaign to prise money from unsuspecting debtors.
The lender, the paper says, admitted to former customers that it had waited until they were in a better position to pay before springing bills on them for the shortfall between their mortgage and the resale price obtained after repossession.
Abbey representatives are hitting people with bills of £30,000 on average. They then return two weeks later offering to write off the debt if they pay a lump sum of 15 per cent immediately. Using these tactics, the paper says the lender has managed slash its repossession losses by half.
But the strong arm tactics have been condemned by the National Association of Citizens' Advice Bureaux for driving people just recovering from the trauma of repossession into the arms of loan sharks.
Abbey defends its methods and says that it has been unfairly singled out for a problem facing the whole mortgage industry.
Retail operations director Yasmin Jetha says: "We understand that repossession is a very traumatic business. We want to emphasis that we look at each customer's individual circumstances, sometimes negotiating a reduced lump sum payment, sometimes accepting monthly re-payments. We have received very few complaints about this."
Mortgage brokers back this line. London & Country senior manager Patrick Bunton says: "I suspect that this involves cases where the Mortgage Indemnity Cover didn't cover the fall in price. But the Abbey board does have an obligation to its shareholders to recover the money."
Bunton believes that concern has to focus the mechanics of how the lender recovers the money and whether a fair price was obtained for the re-sale.
But he adds: "It is a very difficult thing to go back five or six years and work this out."
He believes that adverse publicity of this nature can have a serious impact on a lender's current business.
The Sun says that Abbey's initiative smacks of desperation.
While it currently holds 13.8 per cent of the mortgage market on half year figures, their share of new business is just over three per cent.