Investor funds are flowing into non-conforming lending, with RedZed Lending Solutions completing a placement of A$80 million in mortgage-backed securities with a small group of investors.Formed five years ago, RedZed is primarily funded from a warehouse facility provided by Commonwealth Bank. Shareholders provide mezzanine funding through a related trust.RedZed did not want to be drawn on the level of loans under management, though this is somewhere in the hundreds of millions.The mortgage funder found a single domestic investor to buy the senior tranche of around $27 million of securities. This tranche will pay a spread of 150 basis points over bank bill swap.There are five further tranches in the structure. Some of these drew new investors to the non-conforming loans niche, according to RedZed managing director Evan Dwyer.Dwyer declined to confirm the yield on the RMBS portfolio overall, or on the wider pool of non-conforming loans managed by RedZed.This yield is sufficiently attractive to sustain investment in the RedZed mortgage trust by 15 of the firm's shareholders, with no need to look for outside investors at this stage.