Is one of Australia’s largest non-bank lenders specialising in residential home loans for borrowers who fall just outside the credit criteria of the banks and mortgage insurers.
Pepper is also recognised as Australia’s leading special servicer of third-party asset portfolios.
Established in 2001, Pepper is one of Australia’s leading providers of specialist residential mortgage finance. It is also recognised as Australia’s leading servicer of third party asset portfolios, including residential and commercial mortgages, equipment and auto leases, and unsecured loans.
Pepper primarily focuses on providing mortgage loans to customers who do not meet the acceptance criteria of banks, building societies, credit unions and traditional non-bank lenders, in particular the self-employed, small business owners and borrowers with irregular income or who are unable to provide up to date tax returns, unsubstantiated savings history or a prior record of minor credit impairment.
In August 2011, Pepper completed its acquisition of a $5.0 billion residential mortgage portfolio originated by GE Capital Australia and New Zealand. The acquisition is one of the largest whole loan transactions in Australian history and has enabled Pepper to grow assets under management quickly at a time when non-bank lenders are seeking to grow their market share, rebuild a competitive marketplace, and broaden the choice of home lending options for Australian consumers.
The acquisition of the GE Capital home loan portfolio will accelerate Pepper’s expansion into niche segments of the prime residential lending market in Australia and New Zealand. This enhanced offering will be leveraged through Pepper’s growing national broker distribution networks, and utilise the company’s core credit underwriting and loan servicing expertise.
Pepper is highly experienced in servicing third-party loan and lease portfolios and transitioning these portfolios from other originators and service providers. During the Global Financial Crisis, Pepper significantly expanded its third-party servicing platform and successfully assumed responsibility for a diverse range of asset portfolios across a number of different asset classes.
In all cases, Pepper has been able to substantially improve the ongoing performance of the underlying asset portfolios by applying its standardized servicing and arrears management approach across all asset portfolios under management, utilising the best practices that it had developed in managing the Pepper mortgage portfolio. Pepper is a highly sought after third-party servicing partner for a number of high quality originators and wholesale funding institutions. Pepper was first ranked by Standard & Poor’s (S&P) as an “ABOVE AVERAGE” Residential Loan Servicer in May 2004 and is included on S&P’s Global Select Servicer List.
Pepper has completed eight RMBS transactions since 2001 for a total value of A$2.5 billion, demonstrating its financial strength and resilience as one of Australia’s leading issuers of non-conforming RMBS. The performance of the proprietary Pepper Residential Securities program is unparalleled both in terms of ongoing loan arrears performance and cumulative realised portfolio losses.
In December 2010, Pepper completed the landmark Pepper Residential Securities Trust No.8 (“PRS8”) deal. This was the first non-conforming RMBS transaction in Australia since early 2008, thereby marking the reopening of this important sector of the Australian RMBS market. The A$260 million issue was well supported by a total of 10 blue-chip accounts, including eight domestic and two international investors.
According to Paul Lalor, Director Securitisation, National Australia Bank: “Pepper has built a highly regarded non-conforming RMBS issuance program. The historical arrears and loss performance of Pepper’s publicly rated term RMBS places Pepper in the top echelon of non-conforming residential mortgage lenders in Australia.”