Issuer profile: Stargate Group

Flexstar Mortgage Corporation, Starship Asset Management and Starship Securitisation are part of the Stargate Group (Stargate), an industry leader in the business of direct-to-consumer mortgage lending and wholesale mortgage-backed securitisation in Australia since 1972. Stargate was founded by its current executive chairman, Vernon Spencer, and has a long history in the business of mortgage banking, loan processing, and credit and asset management. Stargate is 100% privately held by the Spencer family.

In 1979 the group was responsible for the first issue of mortgage-backed securities in Australia. It pioneered the introduction of Australian RMBS in the primary and secondary mortgage markets, and has been actively involved with the mortgage industry for the past 46 years.

Flexstar Mortgage Corporation originates residential mortgage loans under the Well Home Loans brand, using a unique web-based mortgage-loan origination programme that enables a borrower to obtain a residential first-mortgage loan directly via the internet.

It provides a genuine loan commitment to the borrower – subject only to the completion of certain minimum-standard conditions – and the majority of the process to settlement is completed electronically without human intervention or involvement.

All the development work and ongoing maintenance for the Halostar computer programme used by Well Home Loans is contracted to Stargate Technologies (a Stargate entity). The specifications require that every single process, from the time a borrower first accesses the Well Home Loans website until the borrower physically receives the funds at settlement of the loan, be determined solely by reference to highly complex binary logic algorithms and human machine logic, and without any scope for discretion, assumption or judgement on the part of any person or rule.

The systems are built to meet the exacting and rigorous security standards imposed by Australian banks and are scaled for tens of thousands of users. The compliance programme is built on the implementation of the guidelines for compliance within a specified risk framework, and requires adherence to all regulatory requirements, lending requirements and business-partner requirements.

Additionally, the Well Home Loans lending policy has been aligned to lenders’ mortgage insurance (LMI) providers to ensure 100% LMI and title-insurance coverage on the entire loan portfolio, ensuring quality loans and minimal risk.

Starship Asset Management acts as trust manager and master servicer of the Starship securitisation RMBS programme, which will programmatically issue premium-quality RMBS to domestic and international investors.

Starship Earth Series are medium-term bonds issued to domestic and international investors from a specific pool of Australian residential first-mortgage home loans, and are similar in security, structure and performance to other RMBS currently on issue in Australia’s capital markets.

Starbonds are short-term bonds structured identically to longer-term RMBS but with an average life of 6-12 months. They have been created specifically to meet the current Australian Prudential Regulation Authority (APRA) securitisation regulatory capital requirements applicable to all authorised deposit-taking institutions (ADIs) that provide warehouse facilities. APRA requires costly additional capital to be set aside by ADIs to support any investment in RMBS of more than about 90-91% of the total value of an RMBS pool including warehouse facilities. To fund this gap, Starbonds are issued to non-ADI investors to provide the remaining funding.