Business purpose lending is experiencing a period of accelerated change. Rising securitization activity, new entrants, tighter regulatory expectations, and increased investor scrutiny are helping to reshape lenders’ thinking about RTL and DSCR products. As we move toward 2026, the industry is examining both new opportunities and new pressures, prompting many to rethink efficiency, quality, and systems that support long-term scalability. Rebecca Smith, Senior Vice President of Business Development at Radian Real Estate Management LLC, shares her perspective on evolving investor expectations, the need for workflow modernization, and how hybrid valuation models and stronger oversight can help enhance business purpose strategies.
HousingWire: It appears there is sustained interest in business purpose lending, particularly in Residential Transition Lending (RTL) and Debt Service Coverage Ratio (DSCR) products. What do you think is driving this interest today, and how are you seeing investor expectations evolving as we head into 2026?
Rebecca Smith: Interest in business purpose lending, RTL and DSCR specifically, has grown meaningfully, especially following RREM’s first publicly rated RTL securitization last year. That milestone drew new attention to the space, and we expect momentum to continue into 2026 and beyond as both RTL and DSCR are attractive products with tailwinds for future growth.
While fix-and-flip lending has been around a long time, RTL as an asset class is still relatively young in public securitization takeouts. Likewise, DSCR securitized loans have been around for many years, but the loans were simply mixed in with standard nonQM residential deals. The demand we’re seeing today, however, may reflect a desire by investors to own one or more of the nation’s 17-million single-family rental properties or a need to create housing inventory by rehabbing older housing stock.
HW: From a risk-management perspective, what are the most common diligence, valuation, and draw review challenges you’re seeing among lenders and investors in the current BPL environment?
RS: Variability with lender requirements is a diligence challenge in the marketplace. Radian Real Estate Management is equipped to handle this challenge as we have seen this before in the early Single-borrower Single-Family rental days. We expect the BPL landscape to continue to adopt standardization to the process due to the nascent nature of the securitizations which will help to ensure lenders are not approaching BPLs differently. Without the right processes and controls, variability could lead to operational inconsistency, which becomes more pronounced as volume rises.
Rate volatility seems to be one of the biggest variables influencing the space right now regardless of requirements variability — rate fluctuations quickly shift how attractive these products appear. Right now, demand is strong because conventional lending has tightened, creating a competitive environment where lenders are eager to deploy capital. That dynamic has also created a wide range of guidelines and very little uniformity across lenders.
HW: What operational inefficiencies can arise when teams are forced to use disconnected systems or manual workflows?
RS: Many stakeholders are still relying heavily on spreadsheets or partial systems that require multiple integrations, which can slow things down. Using a single platform, like Pyramid Platform, where diligence, valuations, and draw reviews occur in one place helps eliminate friction and creates a clean, end-to-end workflow.
Beyond loan origination, technology solutions should offer efficiencies at scale such as they can plug in valuations, surveillance monitoring, or disposition management if a default occurs. As we see a slight uptick in defaults, that full-lifecycle capability may become even more critical.
HW: What is your value proposition for solving BPL pain points, and how can Radian Real Estate Management’s solutions help to reduce risk or cycle time?
RS: Pain points vary by lender, but in a market where fraud is getting more attention, our value is especially clear. When risk rises, lenders oftentimes rely on third-party validation to help make well-informed decisions. Our diligence services provide that added layer of confidence in volatile periods.
Operationally, centralizing everything in a single system can help reduce cycle time and minimize touches. Files move through structured task management rather than through scattered emails or uploads. We also offer APIs for LOS or portal integrations and tools to normalize data across different systems, helping to streamline diligence, and draw reviews through a cohesive platform.
HW: What has been the most noticeable feedback that you’ve gotten from your clients?
RS: Lenders consistently highlight the Appraiser-Reconciled BPO, provided by homegenius Real Estate. It’s a hybrid appraisal in which a licensed broker completes a field BPO, and a licensed appraiser reconciles the final value. This is immensely helpful for fix-and-flip and DSCR loans, where past performance and market trends matter.
Valuation quality is also a major focus for us, especially given recent concerns around appraisal fraud. Hybrid appraisals help improve reliability, speed, and cost efficiency, and have become a key driver of new business as lenders seek alternatives to traditional appraisals.
HW: How do you think emerging complications, such as regulatory scrutiny, capital markets pressure, and investor expectations shaping, etc., are shaping the way you think about quality, oversight, and/or transparency in BPL underwriting?
RS: I’m already seeing signs of what’s ahead. As business purpose lending grows and competition intensifies, regulatory scrutiny following the Tricolor Holdings bankruptcy, investor expectations, and even rising defaults can all influence how the market thinks about oversight and transparency. More activity naturally increases risk, so RREM continually refines its processes based on market inputs, as it continued to do in relation to single-borrower SFR diligence processes.
Right now, fraud is the primary concern — not because it’s widespread, but because recent cases have heightened awareness. If regulation increases, lenders may pause to stabilize, potentially shifting both volume and guidelines. Whatever direction the market takes, we’ll adjust with it.
HW: 2026 is right around the corner. What major shifts do you anticipate in RTL and DSCR lending? What should market participants be doing now to “help enhance their business purpose products?
RS: I expect continued consolidation, more securitizations and new entrants, some of which may eventually lead to M&A activity. Volume will likely keep growing, and the market will hopefully mature as more institutional capital enters the space.
A focus on efficiency and a push for more uniformity in guidelines and valuation practices will likely be helpful in 2026. Hybrid valuation tools will likely become more common, and pairing multiple valuation methods — not just relying on a full appraisal — may help drive speed and consistency. Now is the time to reassess guidelines and strengthen operational frameworks before volumes climb further.
RREM is committed to being a collaborative service provider across business purpose lending, DSCR, and diligence. It is closely engaged with lenders, investors, and brokers to identify emerging needs. Lenders want it, and RREM is working on scalable solutions that add real value as the asset class continues to grow.
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