Kenneth A. Ashley, a New York mortgage banker, gets steamed up when he thinks about his experience with McLean Financial Corp. A letter he wrote last summer to McLean contended that the company "pursues a policy of nit-picking, nondecision-making, buck-passing, and overall evasion."

But what's nit-picking to Ashley is good business practice to John E. Harrison, chairman of McLean Financial.

The two men are among the principals involved in an acrimonious dispute between McLean and several lenders and entrepreneurs who contend the company has broken contracts to provide real estate financing.

Several lending institutions, including Ashley's Liberty Funding Ltd., have accused McLean Financial, the mortgage-banking subsidiary of Mclean Savings & Loan, of accepting fees to finance millions of dollars worth of loans, and then reneging.

McLean Financial Corp.'s unwillingness to perform its obligations "was part of an ambitious scheme to defraud, that has in the recent past victimized numerous businesses," lawyers for Fairfax Mortgage Corp. of Baltimore contend in a lawsuit filed in federal court in Alexandria.

Similar charges against McLean Financial and some of the firm's executives are contained in three other lawsuits filed in the past four months in federal courts in Alexandria and Boston. The other lawsuits were brought by Liberty Mortgage, Commonwealth Mortgage Co. in Massachusetts, and Forrest Creek Associates, a California partnership that had sought financing for a condominium complex in Georgia.

Harrison, who is also a partner at Light & Harrison, the law firm representing McLean Financial, denied all the allegations and said that the mortgage lenders sought to sell his firm loans that did not meet commonly accepted industry underwriting standards.

"They did not comply with the terms of the contract. Therefore, there was no obligation to fund," Harrison said. "We feel that when there is a trial on the matter, the court will agree."

"Industrywide, there has been a problem with inexperienced originators trying to get into the business and not knowing what they're doing," Harrison added.

McLean has filed a lawsuit of its own against one of the mortgage bankers making the allegations, and Harrison said the company will defend itself aggressively against all the charges. He noted that McLean recently won $500,000 in a settlement in a similar dispute arising from a deal to finance a now-failed Hawaiian real estate venture.

Founded in 1981, McLean Financial is the mortgage-banking subsidiary of McLean Savings & Loan, which reports more than $350 million in assets. McLean Financial makes mortgage loans and buys them from other institutions, in both cases for resale to the Federal National Mortgage Association (Fannie Mae) and other institutions. The firm purchases or originates a combined $300 million in loans yearly, Harrison estimated.

In three of the four recent court cases, the dispute between McLean and the other lenders stems from separate contracts reached last year by the mortgage-banking companies to sell home mortgage loans to McLean Financial Corp.

Companies that make mortgage loans often make arrangements to sell these loans to obtain additional capital for their operations. For their part, the purchasers collect fees for buying the loans and can take the opportunity to turn around and resell them.

Under the terms of the contracts in dispute, McLean Financial agreed to buy a certain amount of residential mortgage loans during a fixed six- or 12-month period, according to the lawsuits. In return for this commitment, the bankers said they paid a nonrefundable fee, with the promise of additional payments for each loan that was purchased by McLean. Mortgage lenders like to make such "forward commitments" to sell their loans in order to protect themselves against changes in interest rates.

As soon as the contracts got under way, however, the bankers alleged that McLean never fulfilled its side of the bargain.

The bankers said they made numerous loans that had received preliminary approval from McLean, after which they said they sent the loan packages to the company for final approval and purchase.

The contracts each signed stipulate that McLean Financial retained the right to reject loans that do not meet industry underwriting standards, as set by Fannie Mae and the Federal Home Loan Mortgage Corp, according to court documents. Such standards generally require the initial lenders to do a thorough check of the borrower's creditworthiness and an appraisal of the property, and to make sure certain criteria are met. The documentation of this information must meet industry specifications as well.

Harrison said that, as a practice, McLean only rejects those loans that do not meet the documentation standards.

"We comply with the standards that are generally accepted in the industry. . . . Our commitments do not require us to fund loans that do not comply," he said.

However, the bankers charge that McLean, contrary to industry custom and the terms of the contracts, failed to review the documentation promptly, demanded an unreasonable amount of additional documentation and actually bought few of the loans it was contracted to buy.

One of the plaintiffs, Commonwealth Mortgage Co. of Massachusetts, alleged that McLean imposed procedures "which it knew were far more stringent than those generally followed in the secondary mortgage purchasing market, and which were intended in bad faith to result in McLean avoiding its pledge to purchase" $10 million worth of loans. Commonwealth paid McLean a $100,000 fee for the commitment to buy these loans, and this fee has not been returned, according to its attorney, Edward Rabinovitz.

Meanwhile, Ashley, the president of Liberty Funding, stated in a letter to a top McLean executive, "Three of our mortgage consultants and two loan processors have left the company over the frustration created by dealing with your company."

The Aug. 15 letter, as well as another angry letter, is contained in court pleadings filed by Liberty in its litigation with McLean.

Ashley wrote that even though the mortgages were properly closed, McLean returned with every loan package a "laundry list of items that cover everything from a misspelling of a street name on a termite inspection to a copy of a water easement created in 1890, which affects streets only, and which could be covered by affirmative insurance."

The result of the delays, he said, has been "consumer complaints of fraud on our part, threats of litigation, loan cancellations, and damage to our reputation in the industry. "

After receiving this and subsequent complaints from Liberty, McLean filed suit, accusing the company of changing information on some mortgages it sought to sell without first notifying the original borrowers. McLean also has alleged that some of the loans were closed by Liberty in violation of federal disclosure statutes. Liberty countersued, alleging breach of contract and fraud.

In the Fairfax and Commonwealth cases, the mortgage bankers sued first, and although McLean has not yet answered the complaints, Harrison said he expected the company's defense would be similar. In the fourth case, involving the financing of the Georgia condominium complex, although it collected a $330,000 fee, McLean contends that it never received from the borrower many of the documents required to complete the financing it had promised.

In addition to the lawsuits, four other mortgage-banking companies contacted in New York and other states said they had experienced similar difficulties with McLean, although another said it "had not had any problems." Robert Neblett, an Austin, Tex., lawyer, said that his firm has filed suits against McLean on similar complaints.

Harrison acknowledged that there have been some other complaints involving various of McLean's loan-commitment programs, but he stressed that these constitute a tiny minority of his firm's business.

In a recently settled case, an ex-employe testified that McLean Financial had encountered resistance in its efforts to sell mortgage commitments because of reputational problems.