The loans are currently held by government-owned UK Asset Resolution (UKAR) which has pressed ahead with plans to sell off some of its £59.3bn back book.
Last month UKAR appointed Credit Suisse to begin a process which would result in the sale of a portfolio of performing residential mortgages from the books of Bradford & Bingley, Northern Rock and Mortgage Express.
Sky News reports TSB are leading the race to purchase a £1.4bn portfolio although the bank told Mortgage Solutions it refuses to comment on market speculation.
TSB launched into the market last autumn and floated on the London Stock Exchange in June. However concerns have been raised over its lack of an initial intermediary mortgage channel, with the lender currently planning to launch later in the year.
“The completion of any sale will not affect the terms and conditions of the mortgages sold, and the continued fair treatment of customers will be a key consideration for UKAR in assessing the merits of a sale,” the UKAR statement said.
“The proposed sale is in line with UKAR’s strategy and is part of the orderly wind-down of the closed mortgage books of both B&B and NRAM. UKAR will only complete the transaction if the sale price achieved represents value to the taxpayer.”
UKAR’s decision to pursue a sale followed the release of its annual results which showed it had paid £6.2bn back to the government in the most recent accounting period. Its total customers fell to 529,000, down from 586,000 the year before.
It previously completed the sale of a £465m mortgage portfolio to Virgin Money in July 2012.