Publication Date: Wednesday, 15 October 2020
This article originally appeared in KangaNews
Brighten’s growth focus
Adam Moore, director, head of funding and securitisation at Brighten Home Loans in Sydney, discusses the market entrant’s funding journey so far and plans for public securitisation issuance.
What is the Brighten business story?
Brighten is an Australian-owned and regulated nonbank lender, responsible for the origination, underwriting, servicing, and funding of its mortgage portfolio. The business was established in 2017 and is wholly owned by Real Asset Management (RAM).
We saw an opportunity in the nonbank space as a result of regulatory changes in 2016 and 2017 that favoured the sector and we launched with an innovative product offering that includes home loans for nonresident borrowers. It was becoming increasingly difficult for existing lenders in the space to fund these loans, so there was an opportunity to enter the market in a profitable, high-margin niche, supported by the backing of RAM and its asset-management expertise.
We have grown the portfolio profitably and invested in processes, people, and technology solutions that will allow us to expand the business further. Our end-to-end digital mortgage platform gives us cost and service efficiencies and the flexibility that comes with not having any legacy issues.
We have broadened our product range to offer prime and near-prime, nonresident and construction loans, growing our assets under management to more than A$500 million (US$364.2 million). We are actively recruiting and investing in the growth of our broker network, including aggregator channels, in support of achieving a targeted A$2 billion loan book in two years.
What challenges has COVID-19 brought for Brighten’s origination and how has the company responded?
There were challenges across the board. However, we were able to respond rapidly and put the necessary adjustments in place with minimal disruption to the business.
We have a cloud-based mortgage platform so could shift quickly and seamlessly to working remotely. Our team is already located in five locations so it was not too much of a hurdle to overcome.
From a credit perspective, we have been monitoring our borrowers’ situations very closely. We have also been careful with new origination and tightened our servicing criteria to include additional tests on rental reliance, as well as additional underwriting and verification steps.
We did not make any material policy changes but did look at how some of our policies were implemented. We communicated these changes to brokers and did not have to close any of our distribution channels, while still ensuring we write quality business. The credit quality of the portfolio is demonstrated by the excellent asset performance since inception.
How has Brighten funded its lending to date and what plans do you have for the short and medium term?
We have two warehouse-funding arrangements in place with international investment banks. We also have funding diversification through a wholesale credit fund on the asset-management side of the business.
This reliable and stable funding platform gives us flexibility in the types of loans we write.
The short-to-medium term plan is to build our funding lines as we believe it is an ideal time to expand our lending business into the growing prime and near-prime loan segments. We believe we will be able to compete through a combination of streamlined product offering, simple and competitive pricing structure, and superior service proposition.
While we have proven capability in originating, servicing and funding, we understand the need to show track record as we move into new products. Fortunately, Brighten has celebrated several milestones including the formation of partnerships with leading mortgage aggregators and some of Australia’s best-known brands, which will help build the portfolio and further demonstrates our capability and commitment to becoming a major nonbank lender.
We are actively engaging potential funders to develop new funding lines, which will enable us to scale our growth and enter new product segments. While we can fund the initial growth period ourselves, our development is focused on securitisation-friendly products, as we see securitisation as the platform for funding growth.
Nonresident residential mortgage-backed securities (RMBS) issuance is a nascent product in Australia. Have you had much interaction with institutional investors on this type of lending?
We now have a solid track record with our nonresident loan book and a portfolio that is nearing sufficient size to engage the market on a public transaction. Brighten will be a first-time issuer so we are embarking on the education process to help investors and other market participants understand our model.
Our first public securitisation deal will be a nonresident RMBS. However, as the portfolio grows we also plan to be a regular issuer in the domestic space.
Their ability to work with clients with such high customer service level and fast processing speed is incredible.
I have been working with my BDM, Mikai Ning, for two years. Since meeting her, she has continued to impress me with her professionalism, her efficiency, and her patience to listen and explaining all information. Even during pregnancy period, she even said to me personally that if there is anything I require, that Mikai is still contactable and will get back to me as soon as she can. Her attitude is always super nice and is highly passionate about what she does. I have been in this field for so many years and she is the best BDM I have worked with.
Great review for Mikai Ning. Not only is she highly passionate, but she is also very hard working and highly detail oriented in her work. No matter what time of the day, or day of week, she will always get back to us. We highly appreciate Mikai and Brighten for their hard work and ongoing support.
Brighten’s BDM, Liwen, has left a very impressive impression. Whether it is policy or product, she can solve and fix any problem, big or small, she is always reaching out and supporting us. From the beginning, It has been great to work with Brighten’s vastly experience team and great products. I always recommend Brighten to all my clients.
Mikai is a very passionate and proactive person. Our work with Mikai has is nothing but positive outcomes and we look forward to continuing working Brighten and Mikai.
My BDM Leo Liu has been a great help in assisting me setting up the referral program and educating in terms of products and knowledge. I look forward to the greater relationship with Brighten Home Loan and Leo Liu.
Mikai is our BDM and she is a very detail oriented with great work ethic and speed. If there is a policy update, she will always try and get in touch with us as soon as possible to ensure that we received and understand the relevant changes so that we can better accommodate our clients. Thank you for your ongoing support to us brokers.
It has been very convenient with the interest rates being lower also. Brighten home loan was able to solve so many problems for overseas clients. Big thanks to BDM Mikai for all her support.
I need to thank my BDM Liwen Liu. She has been very responsible since the beginning. She is always patient with my home loan scenario enquires. She always tries to do best for the clients. Liwen is very professional, always gives good advice to brokers. She is an excellent BDM. Thank you.