Non-conforming lender Bluestone passes an important milestone this month; it is 12 months since it revived its mortgage origination business. The company is happy with the volume of business it is doing but sales are still well short of its pre-GFC high.Bluestone chief operating officer Peter Wood said the company was hitting its targets, with sales increasing by about 50 per cent a month.However, the numbers are small. Before the financial crisis Bluestone achieved sales of around A$120 million a month. "We are not doing that volume," Wood said.During the financial crisis Bluestone, like other specialist lenders, could not get funding. It concentrated on the loan servicing side of its business and bought impaired loan portfolios.Last year the funding market opened up for non-conforming lenders and other specialists. In December Bluestone issued mortgage-backed securities in Australia and New Zealand, securitising parts of its old book.Wood said: "Early last year we decided to get back into origination. We sorted out our funding and we got back into the market in August."Macquarie Group, which owns 14 per cent of Bluestone, has provided warehouse funding.The loans that Bluestone is selling are the same non-conforming products it sold before the financial crisis. It lends to people who have problems with their credit histories and can't get a standard loan, and it lends to self-employed people who can only verify their income through non-standard means (other than through tax statements or business activity statements).Wood said if all went well a review of the product range would be included in the next phase of development.Bluestone is distributing through a number of aggregators, including AFG, Fast, Plan, Choice, Ballast and Outsource. It is not on Aussie, Mortgage Choice or Loan Market product lists.Wood said Bluestone had agreements with about 75 per cent of the distribution market and was working on signing more agreements. He has appointed new business development managers in New South Wales, Victoria and Queensland and has introduced a 24-hour service for conditional approvals.He said one of the big changes since Bluestone was last in the origination market was the passage of the National Consumer Credit Protection Act, which brought in licensing of lenders and credit representatives, and responsible lending rules.Wood said: "One of the challenges is educating brokers. There is some sentiment in the industry that they might not be compliant with their responsible ending obligations if they sell a non-standard loan. "We have a process of verifying income and assessing serviceability. If they follow the process they will fulfil their obligations."We have a methodology for getting comfortable with different sources of income, whether it is bank statements, trading statements, pay slips, other debt obligations."All Bluestone's loans are risk-rated and range from around 6.5 per cent to around 9.5 per cent. The maximum loan size is $1.25 million and the maximum loan-to-valuation ratio is 85 per cent.Wood is a Bluestone veteran. He started the New Zealand operation in 2002 before moving to Australia to head the commercial business in 2006. He spent three years