A new non-bank lender, Source Funding, has launched to market, offering residential, investor and SMSF loans to borrowers.
Source Funding is a new lender that wholesale funds – by way of securitised residential mortgages – residential owner-occupier, investor and SMSF loans are distributed through the broker and direct channels.
It has been established by the team behind mortgage manager Mortgage Ezy.
While Source Funding soft-launched with a pilot group of brokers last year (and settled its first loan in December), it officially opened its doors to brokers on 25 January.
It has launched with a program of $400 million supported by “two of the major providers of warehouse facilities in Australia” and is expected to eventually operate as a separate lender and move into a broad range of lending products.
Whom it targets
According to Source Funding, the non-bank aims to address the gaps in the market to cater to “underserved” borrowers, such as those with overseas income, SMSF and low/alt-doc applicants.
Speaking of the decision to launch Source Funding, Mortgage Ezy and Source Funding founder and executive chairman Peter James told The Adviser that Source Funding aims to “fill the gap” where Mortgage Ezy’s traditional programs have “stopped short”.
He said: “We are naturally innovative at Mortgage Ezy but, up until now, that innovation has been stifled because we’ve got to conform with the policy and procedures of our funding line…
“Source is about common-sense lending, cutting the red tape. It’s tailored and individualistic; it’s never going to be using a credit-scoring approach. It’s more around the way we approach those loans and policy to make sure that those clients that may have slipped through the gaps (for example, those that really get a hard time because maybe they’re not able to be credit scored perfectly) get a fair hearing.
“If it makes sense, we’ll do the deal.”
Mr James added that Source was therefore not going to compete with Mortgage Ezy’s existing funding lines, but instead provide “a natural evolution of [the group’s] business model to complement what [Mortgage Ezy] already ha[s]” and enable the group to control its own lending processes and policy.
The group has built its own decision engine technology, DEB (Decision Engine Box) to help provide faster approvals.
It is expected that DEB will approve the majority of loans coming through Source (i.e. those that do not require credit assessor approval/escalation) and be able to reach formal approval “within minutes”.
“Here at Mortgage Ezy, we have always wanted to look holistically for a client. And what Source does is put the power in our hands to bring technology to do exactly that,” Mr James commented.
The Source Funding founder told The Adviser that the lender will ultimately look at securing loans using the bond market and could be used by other mortgage managers, too.
Mr James explained: “To begin with, Source Funding will simply be a new product line in the Mortgage Ezy suite of products.
“It is starting with that first $400 million this year and to begin with, it will have owner-occupier loans and investor loans and self managed super fund capacity (because we’re very much advocates of self managed super fund lending).
“But after the initial period – about a year – we will be opening it up for brokers that don’t deal with Mortgage Ezy who can plug straight into Source for white label product, or for other mortgage managers to take advantage of.
“And, as we expand, we will widen our product range.”
Leadership team changes
Given the establishment of the new lender, Mortgage Ezy has also now restructured its leadership team, including appointing a new head of distribution and a new head of operations.
Former Macquarie Bank credit manager Daryl White has been appointed head of credit for the group, focusing particularly on Source. He has more than 30 years of credit experience, half of which spent at Macquarie.
Debojyoti Naru, Mortgage Ezy’s business and treasury analyst, is heading up the treasury function while Winnie Masibo has been named as chief information officer for the group and is leading the technology function of Source.