Niche aggregator sees merit in non-conforming

BlueChoice, a non-conforming loan aggregator, will be launched in February 2008.

Jacque Aho, the current CEO of mortgage originator Xenium Mortgages will in the interim be CEO of BlueChoice as well, although Aho said there are no ties between the companies.

Aho said that many non-conforming loans submitted by brokers fail due to inaccuracy in applications.

He said 70 per cent of non-conforming loan applications submitted by brokers don't go anywhere.

 "We could almost be certain fifty per cent of the loans would go through," he said.
The remaining half of loan applications would have been rejected on a financial basis.

"We have four [lenders] guaranteed on the panel so far, with four more possible early next year."

Aho said the new aggregator would initially focus only on mortgages, before targeting other non-conforming lending products.

BlueChoice may be targeting a niche where the supply of funding is shrinking. In recent months non-conforming lenders, including Liberty, Bluestone and Pepper have been forced to make adjustments to their business operations, as they position themselves for what they believe will be tight funding conditions for some time to come.

Alistair Jeffery, chief executive of Bluestone Group said that there is some confusion in the market between brokers and non-conforming mortgage products, identifying "that some brokers are better than others in understanding non-conforming loans".

Jeffery added that Bluestone had noticed only a slight reduction in loan enquiries in recent months.

"I think generally the major banks are not competing directly with us, so there's not been a major decline in recent months. They are more competing with the prime non-bank lenders."