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Mortgage broker turned specialist mortgage manager CEO Stephen Mitchell set up Resicom when he was still in his early 20s and the company has gone on to become one of Australia’s leading specialist mortgage management businesses. We catch up with the 32-year old CEO to find out how he’s done it
How did you first get into the lending space?
I started out with La Trobe Financial back in 2003, pretty much out of school. I worked with them until 2005 as an underwriter and I really enjoyed the non-conforming space there. Following on from my time at La Trobe, I left and setup as a mortgage broker and also did some work for a mortgage management company on a casual basis. Fairly quickly, I became too busy to do both and decided to set up as a mortgage manager in 2006 with Resicom.
Why did you launch Resicom?
I had an ambition to service brokers in a certain way, I was always about speed to settlement. I wanted to be able to control and evaluate the way things got done as much as possible, how credit checks get done, how fast we can turn around a valuation and in turn how fast you could settle a transaction. I wanted to take control, to provide a high-level service with fast turnarounds, better than anyone else, therefore I saw the space as a mortgage manager would help me achieve that more than as a broker.
After the GFC, the pricing changed a lot with mortgage management, as when I first started it was mainly prime lending after the pricing changes. I continued just to purely push down a non-conforming and specialist lending avenue as opposed to any sort of prime product. The non-conforming and specialist market isn’t as price sensitive - it is more result sensitive with clients looking for their desired outcome rather than the best possible rate.
Are there any common misconceptions about the non-conforming market?
Misconceptions people have about the market we play in is that they're a bad risk clients or it's a bad risk market. Our answer is that less than 40 per cent of our clients actually have a default. It’s usually another life event that has caused the client to drop out of main stream banking products. Basically, our market is to assist clients who’ve had an issue on the way rather than bad payers. We're also dealing with clients that normally borrow below 80 per cent LVR, so they have equity in their property and most likely other assets as well.
What makes Resicom different?
Resicom is a specialist mortgage manager that provides a solution to those clients that have specialised needs. Those clients could have some small impairment, or they could just be low doc, or they might just need their loan done a lot faster than what they're going to get through the first-tier lenders.
For brokers we also offer a lot of support. All of our underwriters actually work through every single deal with the brokers. So, they can order their valuations up front, we can also look at the credit checks up front and confirm serviceability. we can help them get the deal across the line. Brokers can come to us, run the scenario, we tell them how we think it can be done, the type of funding model required, the pricing and how long it will take to get it across the line. That way they can be really clear with their clients.
We aren't in the business just to get a deal done, we're there to make sure it's the right deal for the clients and the right deal for that funder, ultimately. Therefore, our arrears ratios are extremely low and we maintain very good relationships with our funders.
What lessons have you learned while running the business?
A lot of brokers get stuck working on one or two loans that have a 5 per cent chance of going ahead. One thing I've always said is: ‘Don't waste time on the one percenters’. We don’t chase the one-off, $30-million loans. We chase the bread and butter deals that are going to keep coming back. So, if a loan doesn't suit our funding lines, we won't keep chasing it or holding on to hope.
So, don't try and bend over backwards for absolutely everyone, you cant please everyone, just make sure you've got the right deal.
What is your greatest achievement to date?
Surviving 12 years in the market is probably my biggest achievement professionally; going through the GFC as a pretty much a new-to-market, self-employed broker. More recently, I’m really proud that we settled a $13 million private loan last year.
That and my family. I have one-year-old boy, Charlie, who is my whole life at the moment. He's pretty awesome.
