Virgin Money sells mortgages under the counter

An interesting postscript to Virgin Money's launch of new products through its strategic alliance with Citibank this week relates to its mortgage operation.

Virgin Money got into the home loan market in 2006 with Macquarie Bank as a partner. By 2008 Macquarie, which funded its mortgage lending off balance sheet, could no longer securitise and turned off the tap to Virgin Money and others.

Macquarie's contract with Virgin Money is still in force and runs until later this year. Virgin Money can't launch a home loan product with its new partner until that contract expires.

Under the terms of the deal Virgin Money cannot market a home loan but it can process applications. To be able to do this it signed up with Firstfolio to use its Bloom wholesale mortgage platform.

Firstfolio chief executive Mark Forsyth said Virgin Money "has done some business" through Bloom and may continue to use the platform after it puts new Citibank funded product into the market.

Meanwhile, Bloom is expanding its portfolio. Yesterday it announced that LJ Hooker would offer a "house brand" mortgage product using Bloom for wholesale funding, telephone and web-based loan administration services and training of 140 home loan consultants.

During a two-month pilot LJ Hooker wrote $30 million of loans. Other Bloom partners are AV Jennings and Medibank Private.