There is no doubting John Carson has been there, done that. The self-confessed media recluse, though, hasn't sought any attention or glory for his role in the formation of the mortgage management industry. Yet those inside the industry know Carson, managing director at BMC Mortgage Corporation. In fact, when MPA Lender asked mortgage managers for the ideal person to interview in its inaugural feature, a number of people were quick to suggest Carson.

It's little wonder. His finance career, which began in 1966, has seen him move amongst a range of well known companies, including Finance Corporation of Australia, Citicorp, Barclays and Ord Minnett, before landing at BMC in 1989.

Carson says the lessons he learned through the 1970s and 1980s in particular have proven to be invaluable for his mortgage management career. While he wishes more people in today's mortgage management industry had a similar experience to draw upon, he is not seeking to come across as "holier than thou". It is just that Carson sees things in black and white. Right and wrong. So while he is not immune from mistakes, he has an obvious dislike of liars and people who take shortcuts.

Finance companies

On lessons learned, one important difference to note between now and 20-30 years ago is banks were nowhere near the dominant force in mortgages that they are now. He says because banks required savings histories of around three years, many borrowers instead went to building societies like St.George or finance companies like AGC to secure a home loan.

As such, it was the finance companies that provided ideal training for lending, as he discovered during his time with Finance Corporation of Australia.

"In going to somewhere like that, I was put on some sort of traineeship, and learnt about leasing and financial markets. I worked in securities, I worked to get new business, and I did collections," he recalls.

"I reckon everybody should do collections before they do lending."

For Carson, it is an ethical issue. "I think you've got a moral authority when you're lending people money to identify that they can afford to make the repayments. We're not in the business of selling real estate. If you're going to give people the dream [of homeownership], and then you rip it out from under them ... I honestly believe that you can ruin peoples' lives."

Carson's other significant learning curve came with his involvement in the second securitisation program to occur in Australia. This was undertaken in 1987 whilst he was at McCaughan Dyson, and was motivated by an absence of capital which - up until then - had flowed from, of all sources, Dutch investors. Tax treaty laws with The Netherlands, amended by then treasurer Paul Keating around 1986, eventually saw an end to this capital source. The securitisation program soon followed.

"We knocked out a trust deed ... and launched, over a few months, the second securitisation program in the country ... It was a stop gap thing because we had origination but no money."

While Carson was involved in securitisation before Aussie John Symond, he is quick to credit Aussie's founder with developing the first non-bank principal and interest (P&I) loan. Up until that point Carson was selling interest-only loans to (mostly) investors.

"We all had the same model but John was the first to come out with a P&I loan when he got funded through Primary Industry Bank of Australia [now owned by Rabobank]," he continues. "Everyone said John founded the industry. I don't know about 'founded the industry', but he certainly founded the home loan market."

Overall, his early days were full of rewarding experiences. "Just to be involved in the second securitisation program, going through the ratings agencies, and solicitors, and trust deeds, and trustees. It was all new ground," he says.

His six years at Citicorp, between 1975 and 1980, was also a seminal time, he recalls. While the work was hard, it only added to the depth of knowledge he now draws upon.

Credit crunch

Back in the present, it is hard not to focus much of our conversation, set in Carson's Sydney office, on the credit crisis enveloping the mortgage market. Again, Carson has seen it all before. Granted, it was in a different guise - the 1989-91 recession - although it taught him plenty about managing margins and running a profitable business.

"It's how you run your organisation," he says. "Keep it lean and hungry, and price it so that you're making money on every deal you make. I think one of the problems that have happened over the last few years is a lot of people got carried away with ego, and wanted to write buckets of volume with very low margins. If you had the low margin in the good times, then in the hard times - which it is at the moment - what have you got to live on?"

"We've got a book that the management fees are quite healthy on that keeps us going along nicely. Even though we'd like to write more business, we've adopted a conservative model because I've been there in the hard times."

It is one thing to seek to maintain margins, but another to remain (price) competitive in today's mortgage market. Carson says one way mortgage management firms like his can retain a competitive edge centres on service. 

"You can't be too far out of the market, but if you're within 10-15 basis points, you're not going to be writing the volume the guy that's got a 15 basis point advantage has got. But we can get a turnaround in 24 hours," he says.

That his 16 staff, of which most have been with BMC for more than five years - no mean feat in today's experience-starved labour market - pride themselves on their work, helps. "If you ring here, you get someone," he says. "We don't have voicemail ...We're in a service business. To be going through to a voicemail in a little organisation that prides itself on service defeats the whole purpose."

That few of his loans 'fall over,' or fail to settle, is another point of difference that he says was once highly regarded amongst wholesale lenders, and led to preferential rates. Not so these days, although he admits attitudes are changing amongst some lenders. NAB, for one, is now rewarding brokers with higher trails if loans last longer than three years.

"But that's only just happening," he qualifies.

Learning to sometimes say 'no' can be equally important in maintaining quality. As Carson puts it, "you should be able to sell your 'no' if you're a lender. You should be able to explain to them [the client or broker] why you can't do their transaction. While they may not agree with you, hopefully they've respected what you told them ... And then if you can get a referral from someone you've said 'no' to, you're home and hosed."

Back office

Contrary to what others may think, Carson does not believe back office functions, whilst obviously important, require a multitude of staff to handle. "I often get surprised by hearing of the number of staff at various places ... it's your biggest expense. I know what we write, and I think well, they must be writing a lot of business to be able to pay for all of those people."

He continues, "Mortgage managers aren't what they used to be years ago. Being a mortgage manager is when you're managing your own portfolio; where you have to do a lot more management. I think a lot of people think they're mortgage managers but don't do the back office stuff ...Yet we're all put into the same [basket]."

He says today's systems make life a lot easier in this regard.

"Today, we're online to all the funders, we can go into our system and it's got a lot of historical data, and then we just go online to whatever funder it is, so we're just like a branch."

He says a new Pisces system he is implementing - eApp - will make him the first mortgage manager to take online applications from mortgage brokers.

No rest just yet

If you think times are tough now, wait another few months. In fact, wait another 18 months - it is not going to get easier in that period, he says.

"I heard [NAB CEO] John Stewart say this is going to go on for another 18 months. He got it spot on," he says.

While he sees it as a major problem, he also thinks the banks are playing up the concerns about non-bank lenders that rely on securitisation for funding. He says there's a massive difference between lenders that play in the small sub-prime space, and those that concentrate on prime loans. Moreover, as most banks grudgingly admit, they, too, face higher costs for finance going forward.

Carson plans to be around to see BMC through it all, though. Health permitting, of course. The 59-year old admits he has plenty of friends in the 58 to 65 year-old category who have either passed away, or have had major health problems. For now, Carson has committed to stay on to 2009, and possibly 2011, provided the other shareholders are still happy to keep him.

"I still enjoy it, but sometimes I ask myself why I'm still doing this," he says. "Perhaps the position needs someone younger to keep pace with everything, but I don't want to think about retirement just yet."