Non-conforming lender Pepper Australia will use its acquisition of GE Capital's residential mortgage portfolio as a platform for expansion into prime lending; greater penetration into the mortgage-servicing market, and more portfolio acquisitions.Pepper's chief executive, Patrick Tuttle said Pepper would hire most of the GE staff currently engaged in servicing the A$5 billion book, which Pepper acquired last week. Pepper staff numbers will increase from 80 at present to around 180.Tuttle said: "The increase in numbers will give us scale to do more origination, develop new products and look for portfolios to buy or service."Pepper has stepped up its non-conforming origination program this year, after issuing $260 million of mortgage-backed securities last December. It was the first issue of non-conforming RMBS in Australia since 2008."At the start of the year we were originating $10 or $15 million a month. By the end of the year we will be originating $25 or $30 million," said Tuttle."We have warehouse lines in place, but until we were able to do a securitisation deal we had no idea what our debt cost would be."There is still a large market out there for people who can't get access to prime credit."Tuttle is now looking for opportunities in the prime market. He believes that a small operator like Pepper can't compete on price and must look for niches, such as low-doc mortgages. Having prime mortgages in the portfolio would help make Pepper more attractive to brokers. It would also provide a refinancing opportunity for the GE borrowers Pepper has taken over.The increased size of the Pepper's back office will also allow it to take on portfolio acquisitions or servicing contracts.Apart from the GE deal, last year saw Pepper buy a $120 million portfolio of First Permanent loans from Merrill Lynch. Tuttle said: "Buying portfolios is sporadic and unpredictable. There are always rumours but big deals don't come along very often."Pepper has skills as a back-up servicer, and Tuttle believes there are opportunities to pick up business. "Investors and ratings agencies are more rigorous about demanding that RMBS issuers have back-up services."