Whichever political party breaks the deadlock and forms government could do much more to enhance competition within the mortgage industry maintains RESI Mortgage Corporation’s recently appointed CEO, Lisa Montgomery.
“It’s not on the radar of either side because neither has a full understanding of the issues. Ironically some of the decisions made in the so-called spirit of competition have flown in the face of it.
“So the only way we can really move forward is to create our own competitive edge,” says Montgomery who believes that the non-bank sector will be struggling to claw back the market share it lost to the Big Four banks during the GFC.
“But we’re certainly doing whatever we can to encourage borrowers to put non-banks, building societies and credit unions on their shopping lists.”
Montgomery spoke to Lending Central about her plans for RESI, the MFAA and the gender divide in the industry.
LC: Did you put your hand up for the role of CEO?
LM: I was selected, which was nice.
During the GFC RESI was managed by a committee as opposed to an individual, even though Peter James occupied the seat of managing director.
LC: You were a member of that executive committee.
LM: Yes. And because Peter wants to pursue more of his other business interests it was recognized that it’s important to have someone in that space who is giving 100 per cent to driving RESI’s business interests, strategies and the strong opportunities coming out of the GFC.
LC: How are you planning to capitalise on these opportunities?
LM: About six months ago we started seeing the return of borrower appetite for non-banks.
I’ve always argued that it wasn’t a lack of wholesale funding during the GFC that contributed to volumes dropping for non-banks. It was consumers opting for what they perceived as safety in the Big Four banks.
LC: What has brought them back to non-banks?
LM: They’ve seen that banks haven’t changed their attitude towards their clientele and that non-banks are still here.
Banks weren’t backward in coming out and saying that non-banks were finished. But now that borrowers can see that we’re strong and competitive they’re choosing the service proposition offered by the non-bank fraternity.
LC: There’s not a great deal of difference in interest rates.
LM: There isn’t. There is in the advertised rate but ultimately banks sell more cheaply than what they’re advertising.
It’s the ongoing service post loan approval being offered by non-banks that is the clincher regarding customer satisfaction.
Service is part of RESI’s ongoing proposition to borrowers. We’re looking to enhance that with different products and structures.
LC: Isn’t it time that non-banks rallied together and delivered a joint message to consumers?
LM: There have been frequent attempts at this. In particular the Council of Mortgage Lenders, which I was a part of and which we’ve tried to revive on a couple of occasions.
In terms of our fraternity, the models have morphed and changed so much that it’s difficult to provide a single definition of a mortgage manager.
In addition our numbers have dropped and often our sector is made up of small to medium businesses looking to provide a boutique offering in the marketplace. So time is always a factor; likewise funding support for a support organisation.
LC: Do you anticipate this changing?
LM: There’s always a possibility of us coming together as a group but we need a solid foundation of resources and financial backing to be effective and to drive such an organisation.
LC: What are your thoughts regarding the non-bank presence in the MFAA?
LM: Primarily MFAA support mechanisms go to the broker platforms.
LC: Brokers wouldn’t agree with that.
LM: Probably not but the MFAA has been a fervent supporter of brokers.
LC: Many brokers believe that the big banks receive favoured treatment from the MFAA.
LM: I realise that this is the broker perspective. The question is where does the priority of the MFAA lie? If we’re talking just brokers or non-banks primarily their support goes to the broker sector.
The jury is still out on whether non-banks have been fully supported by the MFAA.
LC: In your new position are you planning to rattle a few cages?
LM: I’ve been in the business nearly 30 years. From a public relations perspective I usually take a cautious route but there’s now going to be an opportunity for a couple of detours outside the conventional.
LC: Are you saying you won’t be risk averse, to use the current vernacular?
LM: Exactly. I may be in some areas regarding our overall strategies but I’m sure I’ll find opportunities to step outside that.
LC: You want to make changes regarding underwriting.
LM: The bulk of the loans we write are through the Advantage platform. Part of what we’re looking to do – and this is encouraged by Advantage – is put in a delegated underwriting authority so it brings more control of the approval process back in house.
This will give us more control of the process of the loan moving through the system and decision-making, which will benefit franchisees and consumers but with it of course comes increased risk.
LC: How do you see RESI moving forward?
LM: We have a very rich resource infrastructure in terms of departments and subject experts. We want to look at how best to utilise that resource rich infrastructure to grow our business.
LC: How many franchisees on your books?
LM: Around 25. The number reduced during the GFC.
I anticipate it growing and see us providing more support to that network individually and collectively. That’s our foundation channel; our primary source of lending.
LC: This is an exciting time for you.
LM: It’s exciting both personally and professionally and typically I want everything done yesterday.
I’m going for some quick wins, some short to medium term changes and long-term sustainability.
I have found that incorporating our senior team in decision-making has unearthed a lot of opportunity and ability. Sometimes it’s easier for an organisation to have company objectives and an executive to run that and not incorporate the entire organisation in the philosophy of achieving those goals. This is something I want to change.
LC: Are you a hard taskmaster?
LM: Right now I’m feeling that I want things done yesterday because I’ve got that authority.
I’m definitely not a traditionalist from a management perspective. That’s a result of me being a Novacastrian (Newcastle born and bred).
Someone asked recently how I feel about the responsibility of my new role. I told them that I don’t know the answer to that yet. I’ve been told to make sure I have some fun along the way. I plan to heed that advice.
LC: I’ve heard that it’s an old boys club in the mortgage industry. Have you encountered any vestige of this?
LM: There are women holding down significant positions within the industry but certainly not a lot of CEOs.
LC: I would have thought it significant to see more women in influential pivotal roles because essentially it’s women who make financial decisions. According to various studies the financial decision makers in families are usually women and there’s no doubt that men and women think differently.
LM: Exactly. All the managers here are men and with Julia Gillard’s elevation there’s been a revisiting of the demarcation between men and women.
But I’ve tried not to articulate it because I don’t see it even though it’s constantly presented to me.
In good business I don’t look at gender differences. It’s about how an individual, whichever gender, contributes to healthy decision-making.