Jonathan Flaws left his job in a New Zealand corporate law firm in 2001 to set up his own practice and establish a mortgage servicing business, First Mortgage Services. The company entered the Australian market in 2004, when it won a contract to provide mortgage services to a specialist reverse mortgage lender. In 2007, the company was acquired by listed US company First American Financial Corporation. Flaws kept all this activity very much under the radar until yesterday, when Perpetual announced that it had agreed to sell its mortgage servicing business to First Mortgage.First Mortgage Services will go from niche player status in the Australian market (it has 30 people in its Melbourne office) to dominant mortgage servicer, with a staff of more than 300.Flaws said this was just the start. "We have very smart IT systems and this acquisition gives us a superb platform for growth. "The plan is for First Mortgage Services to remain a mortgage processing specialist - covering everything from documentation to settlement - but there is plenty of scope there."Perpetual got into mortgage servicing as an extension of its securitisation trust business. However, it found that the business is both low margin and is a big consumer of IT resources.  Perpetual's revenue from mortgage servicing in 2010/11 was A$42.7 million.Flaws said he had seen reports that Perpetual had lost a large mortgage servicing client, ANZ, and that it had been reluctant to invest in the business."We expected to find a business that had issues but that was not the case. It was not broken and it is not struggling," he said."Mortgage processing is a high volume, low margin business. The difference between us as owners and Perpetual is that we are specialist in this area and our parent is a specialist. First American is number one in New Zealand, the United Kingdom and Canada."