The eight men and one woman are suspected of targeting Bradford & Bingley in a massive buy-to-let scam involving more than 500 properties.
The inquiry centred on Eastbourne Financial Services Limited (EFS), an East Sussex-based mortgage broker in liquidation.
Among those arrested are believed to be a bank employee, solicitor, property developer and two mortgage brokers.
Large scale mortgage frauds involve criminal gangs who artificially inflate the values of property.
After obtaining mortgages against the false value of the buildings, the gang defaults on payments and runs off with the cash. The bank is then left out of pocket when the property is eventually repossessed and resold at a lower value.
The soaring property market of the past decade has made it easier for banks to gloss over fraudulent loans. But the recession and tumbling house prices nationwide has left some lenders with sizeable holes in their balance sheets.
The nine suspects, aged between 29 and 73, were questioned at separate police stations on suspicion of conspiracy to defraud and money laundering. They were held following dawn raids on six residential addresses and three businesses in Sussex and north London.
The mortgage branch of Bradford & Bingley was nationalised in September last year. The bank reviewed its lending in the wake of the controversial Government rescue move after coming close to collapse.
Last week the Association of Chief Police Officers (Acpo) issued new guidance to all forces warning of the massive scale of mortgage fraud. Senior officers recommended the Home Office make the financial scam a high priority.