Issuu

FALL 2026

BROKERS ROCK, MEET HARD PLACE

» PAGE 6

TECHNOLOGY CRUNCHING NUMBERS

LENDER LIMELIGHT

The Guy He Wasn’t

» PAGE 70

OPERATIONS THE 15-MINUTE DEAL SCREEN

» PAGE 80

FEATURING HUY DO

THE OFFICIAL MAGAZINE OF THE AMERICAN ASSOCIATION OF PRIVATE LENDERS

CONTENTS CORNER OFFICE 5

This Is What Progress Looks Like Linda Hyde, AAPL

BROKERS 6

Close the Connection Jeremy Altervain, Vault Financial Services

The Figure-Kiavi Deal Is Really a Capital Markets Story Kat Hungerford, AAPL

EDITORIAL

OPERATIONS

46 Leadership Without Permission

80 The 15-Minute Deal Screen

Linda Hyde, AAPL

ADVOCACY 48 The Line at 350 Matthew Gunter, Cardinal Capital Group

52 The GAO Wants to Know: Can

Private Lending Help Housing?

Kat Hungerford, AAPL

Michael Barnett, Loanspark

86 Know the 4 C’s of

Contractor Evaluation

Ron Marszalek, Genstone Construction

90 Don’t Make Borrowers Guess Maya Kraut, Pimlico Capital

94 The Contract You Didn’t Sign Sets the Risk

David Jacobs, Construction

FRAUD

LENDER LIMELIGHT

16 The One VIP List You Don’t Want On

59 The Guy He Wasn’t

Steve Ernest, Fortra Law

22 Verify at the Source Craig Stack, Truepic

MARKET 26 111,000 Short-Term Private Lender Loans in Limbo

Michael Fogliano and Sean Morgan, Forecasa

30 More Inventory. Better Pricing. More Buyers.

with Huy Do

TECHNOLOGY 66 Don’t Let the Demo Make the Decision

Akhil Sahai, The Mortgage Office

SPONSORED CONTENT 70 What Your Portfolio is Hiding From You

Mark Dusseau, Starterstack.ai

Daren Blomquist, Auction.com

36 Margins Narrow, Private

Lending Feels the Squeeze

Nema Daghbandan, Lightning Docs

CASE STUDY 78 Power Lost, Options Preserved on Memphis 4-Unit

Inspection Specialists

MARKETING 98 Your Advantage Is the Standard Erica LaCentra, RCN Capital

CONFERENCE PREVIEW 102 A Look Ahead to the Nation’s Largest Private Lender Event

VENDOR GUIDE 112 Fall Guide

LAST CALL 114 A Beginner’s Advantage Stephanie Gossett, Genesis Capital

Susan Naftulin, Rehab Financial Group

FALL 2026

Corner Office

LINDA HYDE

President, AAPL

KAT HUNGERFORD

This Is What Progress Looks Like

Executive Editor

CONTRIBUTORS

As we look ahead to the 17th Annual AAPL Conference,

Michael Barnett

this year. The conference is always a highlight, bringing

Jeremy Altervain

I am proud of what our association has accomplished

Daren Blomquist

professionals from across the private lending industry

Nema Daghbandan

together to learn, network, and exchange ideas. This

Mark Dusseau

year’s event continues that tradition while giving us an

Steve Ernest

opportunity to consider where our industry is headed next.

Michael Fogliano

Stephanie Gossett

The conference also marks a natural point to reflect on the

Matthew Gunter David Jacobs Maya Kraut

Erica LaCentra Ron Marszalek Sean Morgan

Susan Naftulin Akhil Sahai

Craig Stack

COVER PHOTOGRAPHY BlushPix Inc.

PRIVATE LENDER

Private Lender is published quarterly by the American Association of Private Lenders (AAPL). AAPL is not responsible for opinions or information presented as fact by authors or advertisers.

SUBSCRIPTIONS

Visit aaplonline.com/subscribe.

BACK ISSUES

Visit aaplonline.com/magazine-archive, email PrivateLender@aaplonline.com, or call 913-888-1250. For article reprints or permission to use Private Lender content including text, photos, illustrations, and logos: E-mail PrivateLender@aaplonline.com or call 913-888-1250. Use of Private Lender content without the express permission of the American Association of Private Lenders is prohibited. aaplonline.com Copyright © 2026 American Association of Private Lenders. All rights reserved.

work AAPL has delivered throughout the year. Education and professional development remain central to our mission, and we made meaningful progress in expanding those opportunities for members. This year, AAPL launched four packaged learning courses, giving members accessible, on-demand opportunities to deepen their knowledge and strengthen their expertise. We also hosted more than 12 webinars addressing timely issues and emerging trends, providing practical insights members can apply within their organizations. We continued fostering open dialogue through our State of the Industry updates and roundtables. These conversations give members a forum to raise challenges, explore opportunities, and share perspectives that help shape the direction of our association and our industry. None of this work happens without the commitment of our members, volunteers, committee leaders, speakers, authors, and sponsors. Your time, expertise, and willingness to contribute continue to strengthen AAPL and the value it provides to the private lending community. As we gather for the 17th Annual Conference, I encourage you to make the most of the opportunities to learn, connect, and contribute. The relationships built and ideas exchanged through AAPL are part of what moves our profession forward. Thank you for being part of AAPL and for contributing to its continued growth. I look forward to seeing many of you at the conference and to the work ahead as we continue supporting, educating, and advancing private lending.

LINDA HYDE President, American Association of Private Lenders

FALL 2026

Brokers

Close the Connection After three months of work making a difficult loan pencil, one concession exposed the cost of confusing trust with structure.

JEREMY ALTERVAIN, VAULT FINANCIAL SERVICES

couple years ago, I was introduced to a borrower I’ll call “Rick” through one of my broker channels. Like many relationships in private lending, it started with transactions before it became personal. I closed several loans for him. He was active, deal-driven, and constantly moving—the kind of borrower relationship that can build real momentum if you keep delivering. But we never truly met until much later, after I had already come through for him

PRIVATE LENDER BY AAPL

on multiple deals. When the next request came up, I suggested we sit down for lunch. We hit it off immediately. The chemistry was real, and I mean that in a business sense. It was the kind of connection that makes you think, this could become more than just another borrower. Rick was not only a construction guy; he was a salesman, a relationship builder, and someone who understood how to create energy around an idea. I

operate the same way. He understood construction, development, and the operational side of bringing a property to life. I understood capital, lending, structuring, and how to turn a complicated transaction into something financeable. Rick leased me office space. We were in regular communication and started attending conventions together. We talked about what his construction platform combined with Vault’s lending

platform could become: a joint venture to originate projects, build them, finance them, and create an integrated experience for investors and borrowers. In the middle of becoming partners and building SOPs, Rick ran into a problem on one of his projects. This was not an easy loan. It was one of those files that resists clean placement because it didn’t align neatly with most credit boxes and was nearing maturity default with a lender unwilling to extend or refinance. Rick had acquired the property many years earlier, intending to improve it and ultimately sell. But the 2-year project had stretched to 8 by encountering almost every obstacle imaginable. There were zoning issues, permitting delays, grading challenges, and extensive work required to stabilize the mountainside behind the

property. The construction involved complex engineering, including caissons, and had already gone through years of red tape. The extended timeline changed the entire lending narrative from “construction can be completed for a satisfactory return on investment” to “possible passion project.” Would Rick ultimately make a profit? Would he merely break even? Would he be forced to sell at a loss after investing additional capital? Those questions matter tremendously to a private lender. Bridge lenders and fix-and-flip lenders finance business plans with a defined exit and reasonable profit margin. They do not finance a borrower’s emotional attachment to a property. I love a challenge, but I also wanted to deliver—to show up for the business relationship we were building. So, I rolled up my sleeves and went to work.

Over 3 months, I worked the file to reconstruct years of project history so the delays could be read as what they were: a sequence of zoning, permitting, grading, engineering, and construction challenges that were actively addressed by a capable borrower. The extended timeline wasn’t caused by neglect or incompetence, but by identifiable obstacles that had been addressed one by one. But history alone wasn’t the only stalling point; future value presented another major hurdle. The home was highly customized, designed for a narrow market segment as a luxury property for a high-net-worth buyer who valued privacy, design, entertaining space, and a certain bachelor-lifestyle aesthetic. The property was unique, which in this case was both an asset and a liability. What’s more, we were asking lenders and appraisers to consider whether this property FALL 2026

Brokers

could command a premium beyond what the immediate neighborhood’s comparable sales appeared to justify. While appraisers will often widen the net to ensure shared architectural quality, finishes, amenities, and intended buyer profile, it requires the lender to understand both the collateral and that a buyer will pay a premium. I repeatedly refined the loan structure for an acceptable leverage point, coordinating documentation, responding to underwriting questions, supporting the future value, and pushing for consideration of comps outside the immediate neighborhood. I worked through questions on exit strategy, remaining construction, borrower basis, and diminishing profit margin.

There were moments I was sure the loan was dead.

to jump on board so long as Rick came to the table with the funds to close.

The breakthrough came from reframing the transaction around the borrower’s complete profile rather than asking the lender to rely on the property alone. Rick had an established track record of building high-end single-family homes with few delays and no delinquencies outside the maturity default he faced here. And even after years of setbacks on this particular property, he maintained substantial liquidity, strong credit, and other active real estate interests.

Rick wanted a refinance that had everything built in, so he asked me to keep shopping, despite being down to the wire with his current lender. Then he told me he was going to shop the loan himself, which isn’t unusual, although it was disappointing considering our history. I was confident in my execution.

Eventually, one of my funding sources took a closer look at the file and was ready

What happened next was one of the most instructive moments I have ever experienced as a broker. He called everyone. He was getting verbal approvals and even property walks with implied confidence to close.

Capital That Closes Tired of raising capital and adding more bank lines of credit? Crebrid is a Dallas-based private lender built to help correspondent lending partners scale originations — without building the operational overhead themselves. Bring us your deals — Fix-and-Flip, DSCR, or New Construction - as we move fast, protect your relationships, provide white-label term sheets, and deliver reliable execution from application through closing across all 50 states.

The Crebrid Advantage

Instant Rates

Term Sheet

Needs List

Get your client’s rate in 60 seconds or less.

Custom white-labeled PDF with your broker fees.

White-labeled PDF with required docs attached.

crebrid.com

PRIVATE LENDER BY AAPL

info@crebrid.com

(972) 525-4777

Scan for Rates crebrid.com/explore-rates Enter your deal. Get your terms. No commitment required.

But not one of them would put terms in writing, deliver an LOI, or move the file into documentation. The initial flood of positive reinforcement kept him sure he’d find a real commitment to something all-inclusive, so he kept hunting.

By making one more concession, I thought I was protecting the relationship. I was actually discounting my own value.“

He’d forgotten a key principle of the space: Optimism is abundant, but execution is scarce. Even a letter of intent does not necessarily carry the weight people sometimes assume and is closer to a prequalification letter than final approval.

approval in writing. It didn’t guarantee the loan, but it made the path real.

also validation: I was the only one who had produced real paper in escrow.

Meanwhile, my lender had issued terms, reviewed the complete file, worked through the valuation, considered the requested exception, and provided an

I told the lender he was shopping the loan, and I asked them to let me know how many brokers contacted them about the same deal. It turned into chaos. It was

Eventually my lender made it clear they were tired of the noise and the churn, and that if Rick didn’t close soon, they were going to cancel.

FALL 2026

Brokers

Rick came around and we moved into loan docs. He asked me, “Do you mind if we take your fee off and I’ll take care of you post-close?” This is where trust can make you sloppy. Because of our history and because we were in the middle of building a separate business venture, I didn’t think much of it. It made the math work a bit better, so I agreed. And looking back today, I have to admit it wasn’t just about the math or the trust. After 22 years in lending, I know what I am capable of. I know the relationships I have developed and the value I bring to a difficult file. I wanted to prove that I was the person who could pull the rabbit out of the hat. I wanted the successful closing to cement our friendship, our prospective partnership, and the larger vision we had created together. Part of me believed that by making one more concession, I would prove my value to the business partnership. I’d forgotten I’d already demonstrated it through 3 months of work and by obtaining the only executable loan available. We closed, minus my fee. Then a week went by, and I didn’t hear from him after months of regular communication. I thought to myself, “Are you really going to make me follow up and ask for my commission? Am I really having to chase you to get paid?” But I followed up. And he said he couldn’t pay. Then he said he didn’t remember agreeing to pay me postclose, that I had agreed to handle it pro bono as a favor to a future business partner. (A business associate had witnessed the original conversation and understood it exactly as I had.) 10

PRIVATE LENDER BY AAPL

I realized I had allowed the excitement of potential to override the discipline that protects me. In hindsight, the mistake wasn’t that I trusted. It was that I failed to structure my trust. The circumstances themselves should have required me to say no. I was already using a new loan to resolve a loan soon to be in trouble. He had continued shopping the transaction after I had obtained a written approval, and the reason was that it required Rick to bring cash to the table. Then, at the last moment, I was asked to subordinate my own interests. Had I stood firm and said, “I’m sorry, but my fee must remain on the closing statement,” he still would have needed to close. There was no credible alternative waiting in the wings. The leverage I thought I was protecting was already mine. By removing the fee, I didn’t strengthen my value. I discounted it.

more than praise. You can earn more respect with a professional “no” than an optimistic “yes.” And always, always, ask: Even if I can move this mountain, is it worth the cost? The transaction consumed approximately 3 months of my life. During that time, I was intensely focused on one loan, one borrower, and one business relationship. I missed other opportunities because so much of my attention was dedicated to proving that I could make this one work. And yes, the borrower avoided foreclosure. A potential domino effect across other projects was stopped. The lender was protected. That is a success story. After a lot of back and forth, Rick eventually agreed to pay my fee after the property sells. At this point, that’s almost beside the point. Sometimes the greatest return comes from the discipline, boundaries, and selfawareness we carry into every transaction afterward.

But that’s hindsight, and now I had to learn the lesson. My initial response was to focus on transactions. I became less emotionally invested in clients, projects, and relationships. It protected me from disappointment, but for a while it also moved me too far in the opposite direction. Time has tempered that, and I’ve come to realize that relationships aren’t the problem, but they shouldn’t replace documentation, enforceability, and sound business judgment. Trust and structure must coexist. Looking back now, there are several lessons I carry into every transaction. My fee is a closing condition, not a favor. If I ever accept post-close payment, I underwrite it like a lender. Chemistry is not the same thing as reliability under pressure. Paper matters

JEREMY ALTERVAIN

Jeremy Altervain is president of Vault Financial Services, a boutique brokerage offering niche lending solutions. Altervain specializes in translating investor risk into borrower-friendly structures and identifying potential obstacles before they derail a deal. He is known for delivering deal certainty and streamlining the lending process between capital providers and borrowers.

FALL 2026

News

The Figure-Kiavi Deal Is Really a Capital Markets Story Kiavi originated nearly $8 billion in loan volume last year, but Figure’s interest goes beyond production to a broader distribution ecosystem.

KAT HUNGERFORD, AMERICAN ASSOCIATION OF PRIVATE LENDERS

igure’s agreement to acquire Kiavi for $717 million is the largest transaction the private lending industry has seen. The deal brings together one of the nation’s largest residential investor lenders with a company built around blockchainbased capital markets infrastructure. The announcement itself emphasizes tokenization, artificial intelligence, and technology integration. But AAPL is just as interested in what the transaction says about where private lending is heading and how lenders can position themselves for the next phase of the market. For much of the industry’s history, competitive advantage came from finding borrowers, making good loans, managing the risk, and repeating ad nauseum. The lenders that consistently performed were the ones that grew. Those fundamentals remain unchanged, but lenders today compete with more variables in play. Access to capital, funding diversification, operational scalability, secondary market execution,

PRIVATE LENDER BY AAPL

and data standardization are now important differentiators—particularly as institutional participation expands. That also appears to be one of the central motivations behind the transaction. “From the outside looking in, Kiavi is what I’d call a technology-enabled originator,” said Kiavi CEO Arvind Mohan in an interview with AAPL. “Behind the scenes, we’ve always viewed Kiavi as an AI and data platform that happens to originate real estate assets.” While fintech-first, throughout the interview, Mohan repeatedly returned to capital access, liquidity, distribution, and scale rather than technology for technology’s sake. Kiavi originated nearly $8 billion in loan volume last year through what Mohan described as a direct-to-customer model. Figure’s appeal was the opportunity to connect that origination engine to a broader marketplace ecosystem. “Combining forces allows us to accelerate our growth via Figure’s distribution network of 380+ partners and tens of thousands of loan officers,” Mohan said.

Viewed through that lens, the acquisition appears less focused on acquiring volume as a siloed objective in favor of connecting origination, funding, and distribution into a single platform.

RTL GROWS UP According to Forecasa analysis, private lending originations increased from 273,792 units in 2024 to 288,525 units in 2025, while total origination volume grew from $140.3 billion to $153.1 billion. The number of active private lenders also expanded from 13,860 to 15,865. The industry’s largest lenders are still gaining share, though not at a pace that suggests rapid consolidation. The top 10 lenders accounted for 24.7% of origination units in 2025, compared to 23.8% the year prior. In other words, the market is still fragmented enough to support a substantial number of local, regional, and specialized lenders—despite increasing institutional capital participation. At the product level, DSCR lending demonstrates strong momentum. Data from Lightning Docs shows DSCR volume significantly outpacing bridge loan volume through the first 4 months of 2026, reinforcing the product’s growing role. Borrower demand also remains resilient. Recent Auction.com investor surveys indicate that most investors expect to maintain or increase purchase activity despite uncertainty surrounding home price appreciation and local market conditions. Property acquisition appetite remains particularly strong in the Southeast. Taken together, the data paints a picture of a market that continues to grow, albeit at a more measured pace than some of the

post-pandemic years. The Kiavi–Figure acquisition further illustrates residential investor lending’s continued maturation.

CAPITAL INFRASTRUCTURE AS COMPETITIVE ADVANTAGE Asked whether the Kiavi–Figure transaction represents an isolated event or the beginning of a broader consolidation trend, Mohan expects additional M&A activity as lenders seek scale and more durable capital relationships. He believes future acquirers will emerge from two camps: infrastructure platforms and capital aggregators. “The private lending sandbox will rapidly bifurcate,” he said. “The ‘acquirers’ will be a combination of infrastructure-first platforms...and asset aggregators... The ‘targets’ will be traditional lenders that possess solid regional footprints or niche products but remain fundamentally constrained by legacy capital volatility and manual lending infrastructure.” It’s no secret that institutional capital continues to seek market exposure, in large part because there is now substantial performance history. Many larger lenders now maintain direct institutional relationships, while aggregators often serve as the bridge between smaller originators and larger capital sources. Anecdotally, AAPL is receiving more questions on structure, governance, reporting, and operational controls related to lenders seeking institutional relationships and scalable funding arrangements. Of primary importance is structuring operations for efficient capital flow, especially as lenders diversify through warehouse facilities, funds, equity raises, and hybrid structures. The Kiavi–Figure announcement exemplifies one larger-scale solution, with the

underlying structure possibly being more important than the technology itself.

THE TECHNOLOGY QUESTION The Kiavi–Figure deal’s technology narrative focuses on blockchain infrastructure and tokenization, but Mohan argues that benefits are more along the lines of reducing friction. “The practical implications of blockchain infrastructure center around the elimination of manual back-end intermediaries,” he said. Whether blockchain will become a dominant infrastructure layer is still an unknown. Private lenders have historically been pragmatic about tech adoption and will continue to judge based on measurable improvements in execution, cost, liquidity, and borrower experience. One interesting, if imprecise, insight from AAPL members is that many prefer their primary technology provider—often an industry-optimized loan origination or management system— complete due diligence on emerging tech as part of an integration and prior to the lender’s willingness to adopt. Even so, the broader trend is that capital providers rely on standardized data, predictable processes, and scalable reporting. In that ecosystem, technologies that make loans easier to evaluate, finance, transfer, and monitor naturally become more valuable. The Kiavi acquisition may be one example of that evolution, but it is far from the only one.

WHAT THIS MEANS FOR PRIVATE LENDERS Most lenders will never build a blockchain marketplace. Most will never originate billions of dollars annually. And most will never be acquired by a fintech giant. FALL 2026

News

Among this majority, the relevance is that the deal highlights a market defined by connectivity, where local expertise, borrower relationships, and niche lending strategies are critical advantages. At the same time, capital access, operational scalability, and the ability to interface efficiently with funding sources are important for those lenders hoping to measurably gain market share.

KAT HUNGERFORD

can be scaled without increasing risk and while still serving less standard borrower projects are the next step. The industry may view the acquisition as a straightforward consolidation. Mohan believes something larger is taking place. “We aren’t just shifting around a loan portfolio,” he said. “The benchmark for speed, efficiency, and capital liquidity has been structurally elevated.”

In that respect, the lessons extend well beyond Figure and Kiavi.

Kat Hungerford is a digital project manager, operations strategist, and

Whether that assessment proves correct will take years to determine. Regardless, market sophistication has move past origination numbers into capital formation, liquidity, and infrastructure. Acquisitions like this one offer an early glimpse of one possible future.

Lenders on a growth track must continue combining strong origination capability with durable—and diversified—access the capital. Disciplined operations that

executive editor of Private Lender. With a background in journalism, marketing, and systems design, she oversees initiatives that strengthen AAPL’s programming and infrastructure. AAPL is the oldest and largest national organization representing the private lending profession.

The Most Trusted Advocate of the Mortgage Industry

On Demand Loan Docs Built Smarter

Protecting lenders for over 47 years.

Generate attorney-quality, 50-state compliant loan documents in minutes.

and

experience DOSSLAW.COM 14

PRIVATE LENDER BY AAPL

rethink loan doc automation DOSSDOCS.COM

FALL 2026

Fraud

The One VIP List You Don’t Want On Trouble begins when internal decisions affect access to the market.

STEVE ERNEST, FORTRA LAW

rivate lenders operate in a relationship-driven ecosystem. Brokers bring deals, servicers manage portfolios, trustees handle foreclosures, and title companies close loans. Each participant depends on the others to move capital safely from lender to borrower and back again. Because risk moves through that network, information moves with it. A lender warns another about a fraudulent borrower. A servicer flags a problematic contractor. A title company grows wary of a particular broker or lender. Occasionally, those communications become a blacklist. Such lists raise two important questions for lenders: 1 WHAT RISKS JUSTIFY REFUSING TO CLOSE A TRANSACTION?

2 WHEN DOES RISK MANAGEMENT CROSS THE LINE INTO LEGAL OR OTHER EXPOSURE?

THE SCENARIO Having been a creditor’s rights litigator for nearly three decades, I’ve been to a few rodeos. I’ll change some of the relevant facts to anonymize this story, but it details a situation we uncovered (on behalf of a blacklisted lender) within the past five years, where a regional title company 16

PRIVATE LENDER BY AAPL

serving the private lending market developed an internal “Do Not Close” list. Its original purpose was to internally identify lenders and brokers whose transactions presented unusual legal or compliance risk. The title company, or at least its underwriting division, wanted to eliminate as many prospective losses as possible. The list reportedly included entities associated with repeated document defects, questionable loan structures, regulatory scrutiny, and prior litigation involving closing practices. If a lender appeared on the list, escrow officers were instructed to decline new transactions unless senior management approved an exception. A blacklist is somewhat useless if it isn’t circulated, even internally. And “internally” can encompass a lot of people, making disclosure to outside parties inevitable. Employees discussed it with industry contacts. Brokers heard about it from escrow officers. Eventually, certain lenders discovered they couldn’t get title services from a large nationwide provider. The reaction was predictable. Those lenders argued they had never been notified, never given an opportunity to respond, and never been told what conduct placed them on the list. The lenders sent

FALL 2026

Fraud

angry, even threatening, letters. The title company indicated they were just following underwriting procedures and directives. What began as a compliance tool quickly became a dispute involving defamation claims, antitrust concerns, and industry ethics. Hard feelings developed between industry colleagues who had been business partners for a decade. Those on the list attempted to team up and combat the list makers. Costs mounted on both sides (which is bad news for everyone other than their counsel).

WHERE IT BEGINS Before discussing legal risks, it’s important to acknowledge the legitimate reasons such blacklists exist. In the case of title companies, they face significant exposure when closing private lending transactions. Escrow officers must confirm loan documents comply with applicable law, liens are properly recorded, funds move through appropriate channels, and disclosures satisfy regulatory requirements. When problems repeatedly arise with the same lender or broker, internal escalation becomes inevitable. Common triggers include: DOCUMENT IRREGULARITIES. These

might involve inconsistent loan terms, missing disclosures, or instructions that conflict with standard escrow procedures. REGULATORY CONCERNS. Certain

loan structures can raise red flags involving consumer protection statutes, licensing rules, or usury laws. FRAUD INDICATORS. Repeated transactions

involving questionable borrowers, inflated valuations, or unexplained funding sources often prompt heightened scrutiny. 18

PRIVATE LENDER BY AAPL

LITIGATION EXPOSURE. If a title

company becomes involved in lawsuits tied to particular lenders, management may restrict future transactions. From a title company’s perspective, maintaining an internal caution list is prudent. The difficulty arises when such lists move beyond internal risk management.

distinction to understand is between independent business decisions and coordinated action among competitors.

» INDEPENDENT DECISIONMAKING LOOKS LIKE THIS:

» EACH LENDER REVIEWS ITS OWN UNDERWRITING FILE.

» EACH LENDER APPLIES ITS OWN CREDIT POLICY.

CROSSING THE LINE Businesses generally retain the right to choose their clients. The risk emerges when communications about that decision affect a party’s reputation or market access. Three legal theories frequently appear in these disputes. DEFAMATION. Defamation occurs when a

party publishes a false statement of fact that harms another’s reputation. If a title company communicates statements such as “This lender engages in fraudulent loans,” “Their transactions violate lending laws,” or “They are under regulatory investigation,” and those statements prove inaccurate, the lender may claim reputational damage. Even informal conversations can qualify as publication. In close-knit lending communities, reputational harm spreads quickly. BUSINESS INTERFERENCE. A lender may

also assert intentional interference with economic relationships. Such claims arise when one party’s conduct disrupts another’s business opportunities. For example, if a title company informs brokers or other service providers that a lender should not be used, the lender may argue the conduct interfered with pending or prospective transactions. These claims often focus less on the list itself and more on how information about it circulates within the industry.

» EACH LENDER DOCUMENTS ITS OWN REASONS FOR DECLINING THE TRANSACTION.

» NO LENDER ATTEMPTS TO INFLUENCE ANOTHER LENDER’S DECISION.

The mere fact that multiple lenders reach the same conclusion does not create an antitrust problem. For example, five lenders could review the same credit report, appraisal, financial statements, or title report and each conclude that a loan presents too much risk. If each reaches that conclusion independently, based on its own underwriting standards and business judgment, the fact that they arrived at the same decision is not, by itself, evidence of coordinated conduct. Coordinated action, by contrast, looks very different:

» COMPETITORS SHARE LISTS IDENTIFYING PARTIES WHO SHOULD NOT RECEIVE FINANCING.

» INDUSTRY PARTICIPANTS ENCOURAGE OTHERS TO REFUSE BUSINESS WITH SPECIFIC INDIVIDUALS OR COMPANIES.

» BUSINESSES ADOPT ANOTHER COMPANY’S BLACKLIST WITHOUT CONDUCTING THEIR OWN INDEPENDENT REVIEW.

» DECISIONS APPEAR DRIVEN BY

ANTITRUST CONCERNS. While I’m not

COLLECTIVE PRESSURE RATHER

providing antitrust advice, the central

THAN INDIVIDUAL RISK ANALYSIS.

Independent decisions based on shared facts are one thing. Collective decisions about who should be excluded are another.”

The concern becomes more significant when competitors agree, formally or informally, to stop doing business with a particular broker, borrower, contractor, lender, or other market participant. Courts often refer to this type of conduct as a group boycott or concerted refusal to deal because competitors are acting collectively to deny another party access to customers or services. That does not mean lenders should avoid sharing information about fraud or suspicious activity; information sharing is an important fraud-prevention tool. The critical boundary is between sharing facts that another lender can evaluate independently and reaching an agreement about what that lender should do with those facts. The practical takeaway is to share facts when appropriate, make your own decisions, and avoid participating in any arrangement that resembles a collective agreement to exclude a person or company from doing business.

ACCURACY. Risk assessments often rely on

TRACK REPEAT ISSUES. If the same title

incomplete information. An underwriter may encounter a problematic transaction involving the same entity once or twice, then conclude it presents systemic risk. Without broader investigation, conclusions may prove incorrect.

company, servicer, or trustee raises similar concerns across multiple transactions, don’t treat them as isolated. Look for patterns. A recurring issue may signal a weakness in your underwriting, documentation, funding procedures, or borrower onboarding. When a vendor requests additional information or delays proceedings until concerns are resolved, resist the urge to see every request as an obstacle. Often, the vendor is managing its own regulatory or litigation risk.

PROPORTIONALITY. Even when

concerns exist, exclusion may be disproportionate. A documentation issue on one loan may not justify rejecting every future transaction involving that entity. Ethical risk management requires measured responses.

NOT-SO-SOFT CONCERNS

PRACTICAL TAKEAWAYS

Legal liability represents only part of the issue; private lending operates within a relatively small professional community, where reputation carries enormous weight.

This case study focuses on a title company, but its principles extend throughout the private lending industry. Lenders can take steps to reduce the likelihood of appearing on such lists and to address concerns before they escalate.

Industry organizations, including the American Association of Private Lenders, emphasize ethical conduct precisely because informal information flows influence business decisions. Blacklists raise concerns in several areas. TRANSPARENCY. Someone placed on

a blacklist may never learn the reason. Without notice, they cannot correct misunderstandings or address legitimate concerns. Opaque decision-making erodes trust across the ecosystem.

MAINTAIN DOCUMENT DISCIPLINE.

Incomplete documentation creates unnecessary work for everyone involved. Lenders should ensure loan packages consistently include accurate payoff instructions, compliant disclosures, clear escrow instructions, and properly executed security instruments. Recurring documentation errors are the quickest route to industry scrutiny.

ADDRESS PROBLEMS PROMPTLY AND PROFESSIONALLY. Mistakes happen.

Documents sometimes need correction. Funds are occasionally delayed. What distinguishes a trusted lender is how these issues are handled. Prompt communication and a willingness to resolve problems preserve credibility long after a specific transaction closes. Defensive reactions rarely solve problems; transparent dialogue usually does. When a vendor identifies a legitimate issue, fix it—and let them know what changed. For instance, if a title company points out recurring vesting errors, explain that your loan checklist has been updated. Demonstrating continuous improvement builds confidence that future transactions will be smoother. FALL 2026

Fraud

Resist the urge to escalate every dispute or immediately threaten litigation. Vendors remember how lenders handle difficult situations. A reputation for being reasonable, responsive, and solutionoriented often proves more valuable than “winning” a single disagreement. Periodically ask key vendors, “Is there anything we could do to make transactions smoother?” or “Are you seeing recurring issues in our files?” Vendors often identify operational weaknesses long before they become litigation or compliance problems. MANAGE INDUSTRY RELATIONSHIPS.

Your reputation extends well beyond borrowers and investors. Loan servicers, title companies, foreclosure trustees, receivers, appraisers, insurance brokers, warehouse lenders, and document preparation vendors all form impressions based on their interactions with you. Consistent professionalism makes it less likely your transactions will receive heightened scrutiny. Working repeatedly with reputable vendors allows trust to develop over time. Familiarity with your underwriting standards and operational practices reduces misunderstandings and makes isolated problems less likely to define your reputation. Designate someone within your organization to serve as the primary point of contact for major vendors so concerns can be addressed before they affect future transactions. At least annually, evaluate your key vendors—not just on price and turnaround time, but on communication, responsiveness, problem-solving, and willingness to raise concerns early. Likewise, consider how those vendors would rate your organization as a client. MONITOR VENDOR CONCENTRATION.

While long-term relationships are valuable, 20

PRIVATE LENDER BY AAPL

avoid becoming overly dependent on a single vendor. Maintaining relationships with several reputable title companies and other service providers provides operational flexibility. It can also alert you if one vendor’s concerns are unique or if multiple independent vendors are identifying the same issue. RESPECT A VENDOR’S INDEPENDENCE.

Just as lenders expect the freedom to make independent credit decisions, vendors deserve the same autonomy in deciding whether to accept a transaction. A lender should never pressure a title company, servicer, trustee, or other vendor to disregard its own compliance procedures. Healthy business relationships are built on mutual respect for each party’s independent judgment. When concerns surface, addressing them directly with management at the title company often proves effective. Consider not immediately resorting to “missiles.” Contacts within the sales team at any organization are usually helpful, as the sales group generally opposes “blacklisting” because they want to make money, while the underwriting team is more cautious. Consider informal resolution (like at the AAPL conference). If those are unsatisfactory, then it may be time for a scary letter from counsel.

TRUST REQUIRES BOUNDARIES

of their own. Unchecked, they can produce reputational harm, litigation, regulatory scrutiny, and erosion of trust within the lending ecosystem. When industry participants approach those decisions thoughtfully, everyone benefits. Lenders gain confidence transactions will close efficiently. Title companies reduce exposure. Borrowers receive reliable access to capital. And the private lending community continues operating on its most valuable asset: Trust.

STEVE ERNEST

Steve Ernest brings extensive transactional and litigation experience to his role, having successfully filed and brought thousands of commercial cases to judgment. Ernest’s focus has been on clients in the financial sector, including successfully defending a luxury automaker in antitrust, warranty, and fraud cases. As regional counsel to nationwide lenders, Ernest has written

The private lending market thrives on speed, flexibility, and relationships. Title companies, lenders, brokers, and servicers all participate in protecting the integrity of that market.

credit, purchase, and other transactional

Information sharing plays a role in that protection; fraud prevention depends upon it. But informal systems— especially blacklists—carry risks

needs. Ernest received his Juris Doctorate

documentation, in addition to export compliance, FCPA, and other regulatory compliance. As outside general counsel, Ernest has also navigated clients’ employment, corporate, and real estate from the University of Miami School of Law (cum laude) and was admitted to the State Bar of California in 1996.

PROACTIVE COMPLIANCE THAT PROTECTS YOU

REGULATORS AND INVESTORS ARE ASKING HARDER QUESTIONS. WE’LL MAKE SURE YOU’RE READY

Helping private lenders, mortgage companies, and ﬁnancial institutions strengthen controls and prepare for increased scrutiny. C AT H E D R A L C PA S .CO M CO N TA C T @ C AT H E D R A L C PA S .CO M

Identify Gaps

Strengthen Controls Prepare You for Exams and Reviews

cathedral CPAS & ADVISORS

solutions redeﬁned.

FALL 2026

Fraud

Verify at the Source For lenders relying on media from borrowers, contractors, and inspectors, the strongest opportunity to establish authenticity comes before the file enters the workflow.

CRAIG STACK, TRUEPIC

he first article in this series defined visual risk and its prevalence across workflows built on photos, videos, and their attached data. Lenders routinely make decisions based on visual evidence submitted by someone else, whether underwriting a mortgage, approving a business line of credit, or funding a construction draw. A controlled capture process requires a borrower, contractor, or inspector to produce a net-new image or video within a controlled environment. This establishes evidence about when, where, and how the content was created before it enters the lending workflow. Such a process does not have to slow things down. When legitimate submissions arrive with stronger evidence of provenance, reviewers spend less time questioning an image’s genuineness, whether it was recycled from another property, or if its metadata can be trusted. The goal is to move verification upstream, preventing questionable content from becoming a downstream review problem.

PRIVATE LENDER BY AAPL

Think of controlled capture as a seal applied when visual evidence enters the process. This seal establishes evidence about the image’s origin, capture conditions, and integrity, giving downstream reviewers something concrete to evaluate. They are not left to reconstruct provenance from the media file itself.

EVALUATE BEFORE YOU BUILD Before getting into the technical details, lenders should decide how much of this infrastructure they actually need to own. A controlled capture system combines several problems, varying considerably in complexity. Some require specialized engineering and continuous maintenance; others are relatively straightforward controls. Lenders have two paths to a controlled capture experience: build it internally or evaluate a vendor that has already built one. Several considerations should be paramount; the primary one being keeping up with the pace of technology. Device environments change, operating systems are updated, spoofing techniques evolve, and location data varies by circumstance. A lender building its own system assumes responsibility for keeping those controls current. For most lenders, the best option is to outsource.

THE CAPTURE ENVIRONMENT MATTERS Controlled capture must establish confidence in three areas: the pixels themselves, the fact that the content was captured live during the authorized session, and the integrity of the metadata associated with that capture.

The device is the foundation for all three. A compromised phone can undermine the image, the capture session, and the metadata simultaneously. If a phone runs in developer mode, has been jailbroken, or carries software designed to intercept or alter what its camera and sensors report, that device can make a fabricated image look like an ordinary, untouched capture, regardless of how clean the resulting metadata appears. Securing the device ensures the other two are trustworthy in the first place. Establishing those conditions requires a trustworthy capture environment. The operating system must be checked for signs of compromise, the application must be able to detect attempts to manipulate camera or sensor data, and location information must be treated as evidence to validate rather than a value to accept at face value. Timestamps should come from a trusted server rather than the device clock, which can be manipulated. The controlled capture system and its sensors then need to process the image itself to confirm the pixel content and metadata, including date, time, and location, are consistent with a genuine, untampered capture. Complicating the matter further is how the system handles varied GPS reliability and its tolerance levels for how far a capture can occur from the expected property location. The strongest implementations also protect the cryptographic keys used to seal the capture record within a hardwarebacked keystore, isolating those keys from the operating system and making them substantially harder to extract or forge. Standards such as C2PA can extend that chain of provenance beyond an individual lender’s workflow.

WHEN VERIFICATION HAPPENS IN REAL TIME Some lenders may instead rely on synchronous verification, such as a live video call in which a borrower, contractor, or inspector walks through a property while someone from the lending team watches. This approach can provide direct visibility into the property, but it changes the economics of verification. A live call requires both an experienced reviewer and the person submitting the evidence to be available for an extended time period. It’s also worth being clear-eyed about what synchronous verification is up against. Real-time deepfakes—video altered as it is being recorded and watched—are not hyperbole or a future problem. They are already being used today to defraud businesses across other industries. Truepic does not track confirmed cases specifically within home and construction lending, so the extent to which the technique has reached this market remains unclear. The broader use of real-time synthetic media nevertheless illustrates a limitation of relying on human observation alone.

THE EVIDENCE BEHIND THE PROCESS The lending industry is still developing its own body of evidence around authenticated media. Examples from adjacent industries, however, demonstrate the types of problems a controlled capture process can expose before they become downstream review issues. The D-U-N-S Number, issued by Dun & Bradstreet, is a business identifier used to verify the identity and existence of companies. Truepic was brought in to authenticate images supplied by applicants. In a Truepic analysis of 13,000 D-U-N-S applications across 87 FALL 2026

Fraud

countries, 70% of applicants selected for Truepic inspection abandoned the application process. Of those that continued, 57.8% of submitted images were captured more than 200 meters from the expected business address. For a manufacturer’s retail return and exchange process, Truepic exposed fraudsters submitting separate claims with different identities and information while repeatedly using the same compromised devices and visual evidence. The analysis found more than 2,000 fraudulent claims across at least eight fraud rings, with estimated avoided losses exceeding $1 million.

These examples come from outside lending, so they should not be treated as evidence of comparable fraud rates in private lending. They illustrate how authenticated capture can surface discrepancies in business identity, location, device history, and submitted imagery before questionable documentation moves deeper into a verification or underwriting workflow.

CRAIG STACK

For lenders evaluating controlled capture, the question is where verification belongs in the workflow. Moving that verification to the point of capture gives reviewers stronger evidence before questionable media reaches underwriting, inspection, servicing, or funding decisions.

platform that develops secure camera

Craig Stack is the founder and president of Truepic, a photo and video verification technology. Since 2015, Stack has been responsible for Truepic’s strategic direction and growth expansion. Prior to founding Truepic, Stack co-founded Life Credit Company, a finance company specializing in life settlements. He also worked as an equity trader at Goldman Sachs.

Maximize value The advisory, assurance, and tax professionals at CohnReznick work to understand your strategic objectives, helping you optimize fund performance and manage risk. Visit us at: cohnreznick.com/finance

CohnReznick helps organizations optimize performance, manage risk, and maximize value through associated firms operating under the CohnReznick brand: CohnReznick LLP, a licensed CPA firm providing assurance services; and CohnReznick Advisory LLC (not alicensed firm) providing advisory and tax services.

PRIVATE LENDER BY AAPL

FALL 2026

Market

111,000 Short-Term Private Lender Loans in Limbo New data quantifies an overlooked portion of the private-lending book and tracks what happens.

MICHAEL FOGLIANO AND SEAN MORGAN, FORECASA 26

PRIVATE LENDER BY AAPL

The number to watch is not how much of your book is past due, but how old the past-due portion has become.” Occasionally, projects can go sideways and enter foreclosure. But between these two outcomes lies an unacknowledged category with almost no data: loans that have passed their maturity date and simply remain open. No payoff is recorded, no notice of default filed—they are just outstanding, past due, and unaddressed. Two points bear clarifying: “Past maturity” is not the same as “delinquent.” Records show whether a loan is still open, not whether the borrower is current. Thus, a loan performing under an informal extension is indistinguishable from one where payments have stopped. Second, maturity dates are taken from the recorded instrument. A lender who extended a loan without recording the extension will still find that loan in this group. What this category does capture is the lack of resolution. Forecasa recently launched its “Lifecycle” feature, which tracks whether a loan is

open (not paid off or released/satisfied) or closed (paid off and released/satisfied). When we discussed this feature with an institutional client, they asked us to analyze “stale loans”—those that remain open long after their scheduled maturity. Nationwide, approximately 111,000 open short-term private-lender loans are on the books, representing about $83 billion in recorded principal, and originated by more than 8,500 lenders. Forecasa’s transaction data indicates that roughly 20,800 of these—about $16 billion in original recorded principal—were past maturity and unaddressed as of August 2026. This amounts to close to one in five. Loans showing any indication of payoff or refinancing are excluded from the “stale” count. Any loan with a foreclosure filing is also excluded. Long-term, DSCR-style loans are also excluded; including 30year loans would dilute a bridge-lending

FIGURE 1. 57,040 SHORT-TERM LOAN OUTCOMES FOLLOWING MATURITY, 2021–2023 TL loans typically follow a standard script. A short-term loan, usually for 6 or 12 months, is originated

against a property that needs work. Funds are disbursed in draws as the rehab progresses, and the borrower exits by selling the completed house or refinancing into a long-term mortgage. This cycle is wellunderstood and usually unfolds as planned. FALL 2026

Market

FIGURE 2. NATIONAL BOOK SHARE OF ALL OPEN AND PAST DUE LOANS BY LENDER SIZE

figure into meaninglessness. Dollar figures throughout represent recorded loan amounts, not paid-down balances, so loan counts serve as the primary measure, with dollar amounts being indicative. This is not a recent phenomenon. More than half of these loans passed maturity over 18 months ago.

FIRST, DEFINE NORMAL Understanding this number requires a baseline (Figure 1). Tracking short-term private loans that matured between 2021 and 2023 through today shows about half pay off before they come due, which is exactly what a bridge loan is supposed to do. Another 12% resolve within a month

INSTITUTIONAL CAPITAL. ZERO INSTITUTIONAL FRICTION. We're not just another direct lender funding our own deals — we're owned and powered by Fidelis Investors, managers of $1.1B in assets for over a decade. What that means for you:

Faster closings.

Internally managed capital, fewer layers, quicker approvals and draws.

Direct access.

Work with actual decision-makers — no black box, no surprises.

Deal-driven underwriting.

We know investor deals and structure around them.

The Result: Capital that performs — for fix-and-flip,

fix-and-hold, ground-up construction, and all your RTL needs.

Rates starting at 8.99%

PRIVATE LENDER BY AAPL

862 2176326

info@unitasfunding.com

UnitasFunding.com

of maturity. From there, the tail extends: 70% are resolved within three months of maturity, 79% within six months, and 4% take more than two years. This pattern describes a functioning market and provides context for the $16 billion figure. Most RTL loans resolve on time or early, leaving a minority that does not. The remainder of this article examines that minority: its location, its holders, and its eventual fate.

THE GEOGRAPHY Nationally, 18.7% of open short-term private loans are past maturity. This average masks a wide spread: Across the 44 metros large enough to measure, the rate ranges from under 5% to over 30%. Baltimore leads the country at 30.5%, nearly a third of its open short-term book. St. Louis follows at 27.8%, Oklahoma City at 27.1%, and Indianapolis at 25.9%. Atlanta, the largest metro above the national rate at 22.7%, holds about $1.6 billion in past-due balance, more than any other metro. Statewide, Georgia carries $2.2 billion, with nearly a third of its open short-term dollars past due.

THE LENDER PROFILE Among the 50 largest private lenders by open short-term loan count, about 12% of their short-term book is past maturity. Among the 8,500 lenders outside the largest 200, the figure is roughly 26%—more than double. The largest 50 hold 43% of all open short-term loans but account for just 28% of the past-due ones. These rates are by loan count; in dollars, the gap widens, with 10.7% of the largest 50’s short-term balance past due compared to 29% for the long tail. Simply put, the biggest lenders hold nearly half the loans but less than a third of the problem.

The data does not explain why, but the potential reasons are familiar to anyone managing a lending desk: Institutional capital and warehouse lines enforce resolution discipline, larger shops employ workout teams, and a balance-sheet lender can afford to let a matured loan ride in a way a leveraged one cannot. The practical implication is that staleness tracks how a book is originated and serviced far more closely than where the properties are located. Geography explains some of it; who wrote the loan explains more.

At 18 months, 45%. Even 2 full years past maturity, roughly a third still get paid. A past-due book is not a write-off pile; the odds decay steadily rather than falling off a cliff. But they do decay, meaning the first year past maturity offers the most favorable odds. The number to watch is not how much of your book is past due, but how old the past-due portion has become.

MICHAEL FOGLIANO

THE LOAN SIZE Risk by loan size forms a barbell shape. Loans under $100,000 go past due at about 30%. The cleanest paper resides in the middle, with $1–5 million loans at roughly 15%. The rate then rises again: Loans above $5 million run near 25%, and because they are large, less than 2% of loans account for 42% of all past-due dollars. These rates are also by loan count, and the dollar amounts show an inverse trend; the $5 million-plus band alone carries $6.8 billion of past-due balance, compared to $230 million for everything under $100,000. Of 2021-vintage short-term loans, nine out of 10 have already closed: 38,900 of 43,200 loans paid off and came off the books. Measured against everything originated in 2021, the past-due share is 5.7%. For 2022 loans, this number is 5.1%, and 6.8% for 2023. What remains open from an older vintage is the residue that did not resolve.

Michael Fogliano is a product manager at Forecasa, where he is responsible for product development and data analysis. Fogliano studied mathematics and has extensive experience working with complex data across several industries.

SEAN MORGAN

Sean Morgan is the founder and CEO of Forecasa, where he focuses on product

HOW LONG IS TOO LONG? Blowing through a maturity date, it turns out, is not the end of the story. Of loans still open 6 months past maturity, with no foreclosure filing, about 71% eventually resolve. At 12 months past due, it is 58%.

and business development. Morgan brings a background in oil and gas intelligence, having led a team to a successful exit in that sector. Before his work in the energy sector, Morgan began his career as a CPA for PwC, cultivating a strong foundation in data interpretation and strategic insights.

FALL 2026

Market

More Inventory. Better Pricing. More Buyers. Foreclosure auction volume increased 23% year over year in the second quarter, while average credit bid-to-market value ratios declined.

DAREN BLOMQUIST, AUCTION.COM

rising volume of distressed loans, coupled with servicer motivation to sell earlier in the distressed market funnel—even if it means lower pricing—points to more, and better, buying opportunities for distressed property buyers in 2027. “ The pricing on foreclosures has been starting to become much more attractive for profit than the pricing has been in the last three years or so,” wrote Warren, an Auction.com buyer from Duluth, Georgia. Warren’s comments came in response to a July 2026 survey of over 1,000

PRIVATE LENDER BY AAPL

More properties, more flexible pricing, and more willing buyers are widening the distressed-investment funnel.” FIGURE 1. AUCTION.COM BUYERS PLANNING TO PURCHASE MORE IN 3 MONTHS

Auction.com buyers. The survey revealed gradually improving sentiment among auction buyers heading into the second half of 2026 (Figure 1).

ACQUISITION PLANS UP Thirty-nine percent of those surveyed, Warren included, planned to buy more auction properties in the coming 3 months than they had in the previous quarter. This figure rose from 38.4% in the prior quarter and 36.9% in the third quarter of 2025. Another 41.3% expected to buy the same amount. “We remain optimistic about current conditions and plan to keep growing our

rental and fix-and-flip portfolio through Auction.com over the next few months,” wrote Shlomo, a New Jersey buyer. Market conditions were also making 22.9% of buyers surveyed say they are more willing to acquire auction properties, a slight increase from 22.6% the previous quarter and 19.4% in the third quarter of 2025. Another 41.0% reported no impact from market conditions on their willingness to buy, while 36.1% felt less willing—a slight rise from 35.5% last quarter but down from 38.3% a year ago. Comparing the survey data with Auction.com sales activity suggests that improved buyer sentiment tends FALL 2026

Market

to coincide with higher sales (Figure 2). The survey is conducted early each quarter, while the sales rate reflects activity throughout the quarter.

FIGURE 2. BUYER PURCHASE INTENT VS. FORECLOSURE AUCTION SALES RATE

“Better options in my market result in more purchases on my end,” wrote Linah, a buyer in Dallas, Texas.

AUCTION INVENTORY UP These better options stem from increased inventory at auction and lower pricing for properties entering the market in many areas, according to proprietary Auction.com data. Nationwide, foreclosure auction volume in the second quarter of 2026 climbed 23% from a year ago, matching a 6-year high set in the previous quarter, as reported by the Q3 2026 Auction Market Dispatch published by Auction.com. About 15% to 20% of foreclosure auction purchases are financed, either at the auction itself or soon after, based on Auction.com’s analysis of public record data. Financing foreclosure auction purchases can be challenging because buyers typically lack interior access to the property before the auction. Yet, for lenders able to navigate these challenges, such constraints can also create opportunities to finance these transactions. The rise in completed foreclosure auction volume was widespread, increasing yearover-year in 34 states, including South Carolina (up 112%), Colorado (up 99%), Georgia (up 89%), Kentucky (up 78%), and North Carolina (up 76%) (Figure 3). While nationwide completed foreclosure auction volume in the third quarter remained 34% below the pre-pandemic level of Q1 2020, 14 states—including Texas, Arizona, Minnesota, Louisiana, and Colorado—posted volumes above their pre-pandemic levels.

AUCTION PRICING DOWN More than increased volume at foreclosure auctions is lifting buyer sentiment. Pricing 32

PRIVATE LENDER BY AAPL

adjustments by mortgage servicers and government agencies selling properties at auction are also playing a role. Foreclosure auction pricing, measured by the average credit bid-to-market value ratio, fell 3% from the previous quarter and 4% from a year ago in the third quarter, according to the Q3 Auction Market Dispatch. The credit bid represents the lowest amount the seller is willing or able to accept at auction. Lower auction pricing was widespread, decreasing year-over-year in 53 of the 99 metropolitan statistical areas analyzed and from the previous quarter in 69 (Figure 4). Markets experiencing a quarterly decrease in average credit bid-to-value pricing included Dallas-Fort Worth, Houston, Chicago, Atlanta, and Phoenix. “If we keep seeing discounts, there will be more sales,” wrote Michael, an auction buyer in the Dallas-Fort Worth metro area.

PRE-FORECLOSURE VOLUME UP Meanwhile, a growing number of distressed homeowners face foreclosure, and for many, selling may be their best option to avoid it. Many of these homeowners are underwater, meaning any pre-foreclosure sale will be a short sale. Mortgage servicers are also beginning to recognize that agreeing to a short sale can be the best way to minimize losses on defaulted loans. “Usually, your first offer is always going to be your best offer,” said Tavia Dowden, a Pensacola, Florida, real estate agent who helped a distressed homeowner facing foreclosure sell via short sale using SmartSale, a new Auction.com product that facilitates collaboration between homeowners and servicers for pre-foreclosure sales. The number of homeowners interested in selling pre-foreclosure through

FIGURE 3. CHANGE IN FORECLOSURE AUCTION VOLUME BY STATE, Q2 2026 VS. Q2 2025

FIGURE 4. CHANGE IN FORECLOSURE AUCTION SELLER PRICING BY MSA, Q2 2026 VS. Q2 2025

FALL 2026

Market

FIGURE 5. SHORT SALE VOLUME, Q1 2022–Q1 2026

Source: Cotality

SmartSale surged dramatically in the first half of 2026. Auction.com data shows an 88% jump in distressed homeowners contacting Auction.com about potentially selling via SmartSale between the first and second quarters of the year. While this increase in SmartSale interest does not necessarily translate to a comparable rise in completed short sales, when viewed alongside other market data, it may suggest the recent upward trend in short sales will continue. These homeowners contacted Auction.com after discussing options with their mortgage servicer, indicating servicers are also more open to pre-foreclosure sales, even if they result in short sales. Many auction buyers are also interested in purchasing pre-foreclosure properties, which appear on Auction. com as Private Seller listings. “We try to purchase two deals per week from any and all sources,” wrote Patrick from Jonesboro, Tennessee, elaborating on his plan to purchase more properties in the next 3 months. 34

PRIVATE LENDER BY AAPL

An analysis of public record data from Cotality shows an acceleration in short sale volume increases over the past few quarters. While short sale volume remains a small fraction of overall sales, it rose 14% from a year ago in the first quarter of 2026—the fourth consecutive quarter with an annual increase and the largest since the fourth quarter of 2023 (Figure 5). Data from Intercontinental Exchange (ICE) indicates a rapidly growing pool of potential short sales. In its August 2026 Mortgage Monitor Report, ICE reported 813,000 underwater homeowners nationwide, an increase of 250,000 (44%) from a year ago. The report also found 320,000 underwater homeowners who were behind on mortgage payments, nearly double the 163,000 from a year ago. The rising volume of distressed sales—both pre-foreclosure and at foreclosure auction— is leading buyers to anticipate an increase in their purchase volume into next year. “I am definitely excited to buy more properties to fix and flip, especially in 2027,” wrote Verna, a buyer from Memphis, Tennessee.

DAREN BLOMQUIST

Daren Blomquist is vice president of market economics at Auction.com. In this role, Blomquist analyzes and forecasts complex macro- and microeconomic data trends within the marketplace and greater industry. Blomquist provides value to buyers and sellers using the Auction. com platform through his analysis and reports. Blomquist’s reports and analysis have been cited by thousands of media outlets nationwide, including all major news networks and leading publications such as The Wall Street Journal, The New York Times, and USA Today. Blomquist has been quoted in hundreds of national and local publications and has appeared on many national network broadcasts, including CBS, ABC, CNN, CNBC, FOX Business, and Bloomberg.

Contact RCN Capital Today! RCNCAPITAL.COM INFO RCNCAPITAL.COM 860.432.5858

© RCN Capital, LLC. 2026 All Rights Reserved. NMLS #1045656. RCN Capital, LLC is licensed in AZ (License #: 0932325), CA (Loans made or arranged by RCN Capital, LLC pursuant to a California Finance Lenders Law license # 60DBO-46258), MN (MN-MO-1045656), and OR (ML-5571). This is not an offer to lend. All offers of credit are subject to due diligence, underwriting and approval. Not all borrowers will qualify and not all borrowers that qualify will receive the lowest rate or best terms. Actual rates and terms depend on a variety of factors and are subject to change without notice. FALL 2026

Market

Margins Narrow, Private Lending Feels the Squeeze Bridge lending is gaining momentum while DSCR growth normalizes, but tighter margins and shifting market conditions are leaving lenders with less room for error.

NEMA DAGHBANDAN, LIGHTNING DOCS

PRIVATE LENDER BY AAPL

DEFINITIONS A bridge loan has a duration of 36 months or less, utilizes interestonly payments for the term, and includes a balloon payment at the end. These loans are commonly referred to as residential transition loans, fix-and-flip, non-owner occupied, hard money, or other terms describing a short-term loan generally secured by a residential property for investment purposes. DSCR loans are 30-year term loans secured by rental properties. DSCR stands for Debt Service Coverage Ratio, indicating that the primary underwriting for these loans is done by dividing the property’s monthly net operating income by the monthly debt service. A user refers to a unique company employing the Lightning Docs platform. If multiple individuals within the same company access the platform, they are collectively counted as a single user.

rivate lending entered 2026 with strong momentum, but the market has become less forgiving as the year progresses. Bridge lending is posting consistent growth and gaining ground on DSCR, while DSCR lending is growing at a slower pace against 2025’s record volumes. Meanwhile, falling private lending rates and rising benchmark yields have compressed spreads, leaving lenders to balance volume, pricing, and risk in a highly competitive market.

As of July 2026, Lightning Docs, a loan document software by Fortra Law and the official loan document provider for the American Association of Private Lenders, has processed over 45,000 business-purpose loans totaling $26.5 billion this year, including 20,804 bridge loans and 24,639 DSCR loans. This analysis examines bridge and DSCR lending performance through the first 7 months of 2026 and potential signals for the second half of the year.

METHODOLOGY Loans below $50,000 and above $5,000,000 have been removed from the data set. Loans with interest rates below 4% and above 20% have been removed from the data set. For loan volume data, the user must have signed up with Lightning Docs prior to 2025.

FALL 2026

Market

BRIDGE LENDING After an up-and-down 2025, bridge lending has settled into a steadier pattern of 5% to 10% year-over-year growth for most of 2026 (Figure 1). June was an exception, with a 26% surge, the only month this year bridge growth outpaced DSCR. Limited housing may be pushing investors to pivot toward new construction, which has increased significantly this year, while pure bridge loans—those without construction holdbacks—are down slightly. Average bridge loan rates continued to gradually decline through the first seven months of 2026, with a brief uptick in March before declining again in June and July (Figure 2). July’s national average dipped below 10% for the first time since 2022. Lenders appear to prioritize volume growth over margin, tightening spreads to remain competitive, even as 10-year Treasury rates and consumer mortgages climb. Average loan amounts have fluctuated but remained near $700,000 nationally. Over one in five bridge loans on Lightning Docs originate in California, where the average typically exceeds $1 million, skewing the national figure upward. Excluding California, the national average drops to $608,900 for the year ($610,785 in July), nearly $100,000 lower. Most states fall well below that national average. The top 10 states by bridge loan transaction count remain largely static, driven more by population size than shifts in demand. California, Florida, and Texas dominate, with Washington—the 13th most populated state overall—being the least populated state to appear in the top 10. A per capita view is more revealing. California, Florida, and Texas still post 38

PRIVATE LENDER BY AAPL

FIGURE 1: BRIDGE LOAN VOLUME AMONG THE SAME 222 USERS WITH 9.4% YOY GROWTH, JANUARY 2025 –JULY 2026

FIGURE 2. AVERAGE BRIDGE LOAN RATES AND AMOUNTS, JULY 2025 –JULY2026

FALL 2026

Market

volumes high enough to remain near the top, but Hawaii leads nationwide for the second consecutive year, though its per capita bridge activity fell about 17% year over year (Figure 3). Oregon and Ohio are new to the top 10: Oregon climbed from No. 11 to No. 5, and Ohio jumped from No. 22 to No. 9—a 113% increase, the biggest climb nationwide.

closures, keeping transaction volume flat despite improving financing terms.

setting 2025, making matching last year’s

DSCR lending followed a different path from bridge lending, with strong growth through Q1 2026, easing through Q2

FIGURE 3. BRIDGE LOANS PER 100,000 RESIDENTS, Q2 2026

PRIVATE LENDER BY AAPL

DSCR remains a sought-after product, but is now measured against a record-

DSCR LENDING

At the county level, the dominance of California, Florida, and Texas is clearer, accounting for nine of the top 10 counties by bridge loan transaction volume (Figure 4). Cook County, Illinois (Chicago), is the lone outlier. Cook County also stands out for a steep drop in average loan amount and interest rate over the past 3 months, while maintaining consistent loan count. Inventory appears to be the limiting factor: falling rates create attractive conditions, but limited supply caps deal

into July. At 35.8% growth year-to-date,

percentages challenging (Figure 5). Among tracked users, Lightning Docs recorded new monthly DSCR volume

Volume is holding up, but tighter spreads mean lenders have less room to absorb pricing pressure, market volatility, or a loan that goes sideways.”

FIGURE 4. BRIDGE LOAN RATE VOLATILITY IN TOP 10 COUNTIES, Q2 2026 MAY

JUNE

JULY

COUNTY

RATE

AMOUNT

LOANS

RATE

AMOUNT

LOANS

RATE

AMOUNT

LOANS

Los Angeles, CA

10.06%

$1,121,094

169

10.19%

$1,149,698

182

10.29%

$1,145,122

168

San Diego, CA

10.01%

$956,758

128

9.67%

$1,060,200

140

9.62%

$1,102,962

150

Cook, IL

10.65%

$718,504

10.48%

$544,858

10.28%

$363,256

Mami-Dade, FL

9.61%

$1,122,768

9.18%

$1,221,907

9.07%

$1,417,837

Harris, TX

9.71%

$488,276

9.81%

$409,950

9.97%

$475,117

Dallas, TX

9.79%

$953,297

10.34%

$749,822

9.68%

$881,178

Orange, CA

9.96%

$1,366,195

9.99%

$1,287,135

9.83%

$1,302,273

Bexar, TX

9.97%

$378,607

10.14%

$187,120

9.86%

$301,443

Santa Clara, CA

8.92%

$1,520,539

9.47%

$1,655,365

9.27%

$1,620,773

Pinellas, FL

9.61%

$437,850

9.82%

$649,990

9.34%

$486,456

FIGURE 5: DSCR LOAN VOLUME AMONG THE SAME 54 USERS WITH 35.8 YOY GROWTH, JANUARY 2025 –JULY 2026

FALL 2026

Market

records in 10 different months last year; this year, it happened only once through July. The DSCR market is more reactive to macroeconomic factors; its growth slowdown coincided with the Iran war, rise in oil prices, and 10-year Treasury rates. DSCR interest rates began the year with a steady decline, briefly dropping below 7% in March, before sharply reversing with 3 consecutive increases in Q2 (Figure 6). July data show rates falling again, coinciding with a record volume month across all DSCR users on Lightning Docs. Strong secondary market appetite and increased competition from non-QM lenders have driven the downward trend. The Q2 reversal fits the pattern of DSCR’s sensitivity to macroeconomic factors. Since 2025, average DSCR loan amounts have shown little variation, hovering between $300,000 and $323,000 in 2026.

Similar to bridge loans, the raw top 10 for DSCR lending tracks population, with Florida, Texas, and Ohio topping the list, unchanged from last year. The per capita view significantly alters this: Ohio emerges as number one, joined by Delaware, New Jersey, Pennsylvania, and Missouri in the top 5 (Figure 7). These top-performing states on a per capita basis are concentrated in areas with more affordable real estate. Except for New Jersey, these top 5 states have average loan amounts under $220,000, well below the national average. Conversely, California, a top 10 state by total volume, ranks near the bottom on a per capita basis. Other top 10 states, including Texas, Michigan, Georgia, North Carolina, and New York, fall into the middle of the pack.

FIGURE 6. AVERAGE DSCR LOAN RATES AND AMOUNTS, JULY 2025–JULY 2026

PRIVATE LENDER BY AAPL

The top counties for DSCR lending show more variety than bridge loans, with 8 different states represented. No single county has consistently held the top spot. Cuyahoga County, Ohio (Cleveland), leads for the year overall, but Philadelphia, Pennsylvania, and Harris County, Texas (Houston), have each posted the highest monthly volume recently, highlighting the market’s competitiveness (Figure 8). DSCR is a mathematical game, requiring understanding of market rental rates and how they pencil out at current interest rates. Where rates increase and migration inflows occur, DSCR ratios will improve and alter the top markets.

MARKET COMPARISON While bridge rates declined and DSCR rates dipped in July, consumer mortgages and the

FIGURE 7. DSCR LOANS PER 100,000 RESIDENTS, Q2 2026

FIGURE 8. DSCR LOAN RATE VOLATILITY AMONG TOP 10 COUNTIES, Q2 2026 MAY

JUNE

JULY

COUNTY

RATE

AMOUNT

LOANS

RATE

AMOUNT

LOANS

RATE

AMOUNT

LOANS

Cuyahoga, OH

7.24%

$138,224

100

7.38%

$125,962

7.33%

$145,188

107

Wayne, MI

7.32%

$153,387

7.40%

$209,178

7.29%

$167,577

Harris, TX

6.95%

$282,867

7.19%

$397,542

7.26%

$266,981

110

Philadelphia, PA

7.13%

$224,531

7.20%

$201,349

105

7.19%

$244,126

Miami-Dade, FL

6.85%

$403,872

7.09%

$457,195

7.10%

$533,751

Cook, IL

7.27%

$310,896

7.17%

$296,065

7.20%

$323,513

Allegheny, PA

7.25%

$215,399

7.23%

$226,819

7.40%

$291,210

Baltimore City, MD

7.07%

$184,980

7.20%

$242,574

7.05%

$211,640

Dallas, TX

6.94%

$309,970

7.12%

$292,263

7.03%

$246,511

Maricopa, AZ

6.86%

$458,663

7.10%

$394,693

7.01%

$440,024

FALL 2026

Market

FIGURE 9. BRIDGE AND DSCR LOAN RATES COMPARED WITH INDEXES, JULY 2025 –JULY 2026

10-year Treasury climbed steadily over the past 5 months, leading to meaningful spread compression (Figure 9). In July 2025, the spread between DSCR rates and the 10-year Treasury was 3.22%; by July 2026, it narrowed to 2.54%, one of the tightest margins on record. A similar pattern holds against consumer mortgages: DSCR rates were as much as 103 basis points above consumer mortgage rates in September 2025, narrowing to 62 basis points by July 2026. Both trends indicate strong demand for DSCR, driven by insatiable capital markets demand from insurance companies and securitization markets. A trend to watch is whether DSCR loan delinquencies will rise, prompting a readjustment of risk-based pricing. The first 7 months of 2026 reveal two distinct private lending stories: bridge lending regaining ground lost in 2025, and DSCR leading the market despite normalizing

growth rates from last year’s records. Together, these products benchmark shifts in private lending this year. Inventory constraints and increased bridge lending competition have pushed lenders to tighten margins and pivot toward new construction to sustain modest year-overyear growth. DSCR faces its own increased competition from non-QM entrants pushing down rates, but macroeconomic factors have made the product more volatile, and a record 2025 has made this year’s growth harder to sustain. Bridge lending appears best positioned in markets with tight inventory and a need for new construction. DSCR should gain ground as macro volatility eases and last year’s momentum reasserts itself. With margins in both categories near record lows, lenders must remain attuned to external factors shaping each product in the months ahead.

NEMA DAGHBANDAN

Nema Daghbandan, Esq., is founder and CEO of Lightning Docs, a cloud-based software that produces business-purpose mortgage loan documents nationwide. He developed his expertise in private mortgage lending as a real estate finance attorney and partner at Fortra Law. Lightning Docs produces attorney-grade short-term bridge, construction, and temporary financing documents, as well as term financing typically associated with DSCR rental loans. Lightning Docs is the official loan document provider of AAPL.

PRIVATE LENDER BY AAPL

▪ ▪ ▪

• • • • • •

Diversifying your Capital Perfect for Broker and Lenders Capture Lost Revenue!

t an he la d g te rea st tes t

NEXT LEVEL ONE OF A KIND LOAN SIZING ENGINE

Quick Application Processing Underwriting Servicing Investor Return / Fund Management Closing/Funding

The Complete LOS System

FALL 2026

Editorial

Leadership Without Permission Industries mature when the people who create opportunities stop treating access as something they personally control. Leadership is measured by what others can build after you open the door.

LINDA HYDE, AMERICAN ASSOCIATION OF PRIVATE LENDERS

recently spoke with an executive whose company had been removed from an industry association.

The specifics of the situation aren’t important here. Competing business interests, long-standing relationships, committee involvement, event participation—all contributed to a disagreement that became bigger than the issue that started it. One comment, however, did catch my attention. During the conflict, the executive was told, in essence, “I made you.” Later came another message: “I want you gone.” Having worked in and around the private lending industry through AAPL for over a decade, I’ve heard variations of that sentiment more times than I can count. Sometimes it’s stated plainly. More often, it’s wrapped in language that sounds perfectly reasonable: “I gave you your start.” “I introduced you to the right people.” “I gave you credibility.” “I was here before you.” “I started this.” To some extent, all these statements can be true. None of us builds a career alone. Mentors matter. Relationships matter. Organizations

PRIVATE LENDER BY AAPL

create opportunities, and people open doors for one another every day. The problem begins when contribution becomes ownership. Once someone believes “I started this” means “this belongs to me,” it doesn’t take long before “I helped you” becomes “I made you,” and eventually “I made you” becomes “I want you gone.” That isn’t mentorship; it’s control. And this mindset can hold an industry back.

INCLUSION MEANS NOBODY OWNS ACCESS Perhaps this resonates with me because the idea isn’t new. Last year, I wrote about inclusion in Private Lender Perspectives. Later, I spoke from the stage at our Annual Conference about a related principle: ownership is not leadership. These ideas have always been connected for me. Inclusion isn’t simply about who gets invited into a room. It’s about whether people are allowed to participate fully once they’re there. It’s about creating an industry where opportunity, credibility, and influence are earned through contribution, not proximity to power. At its core, inclusion requires believing that no person, company, or organization owns access to an industry. I’ve thought about this for years, having experienced the opposite firsthand. As a

woman in a historically male-dominated industry, I’ve seen how easily influence can be mistaken for authority and how quickly disagreement can be interpreted as disloyalty. Healthy industries don’t grow by protecting access; they grow by expanding it.

LEADERSHIP MEANS NOBODY OWNS SUCCESS Associations occupy a unique position in any profession. Members invest money, time, expertise, and trust. They should be able to participate without wondering whether disagreeing with a leader will affect their standing. This doesn’t mean organizations should tolerate every behavior. Standards matter, and accountability matters. But such decisions should be based on conduct, not personal loyalty. At AAPL, our members do not have to agree with me or my team. Many, in fact, don’t. Members have challenged policies, questioned decisions, and criticized programs. This isn’t a threat to the organization; it’s a sign of engagement. Trust exists when people believe an organization is bigger than the personalities within it. When standards are applied consistently, people gain confidence that participation is based on principle rather than preference.

That’s the difference between leadership and ownership. Leadership isn’t about exercising control over people. It’s about creating an environment where people can contribute, disagree, innovate, and succeed without needing your permission.

MATURE INDUSTRIES MEAN NOBODY OWNS THE FUTURE The people who helped build private lending deserve tremendous credit. Many founded companies, created associations, developed lending models, built technology, and helped transform the industry into what it is today. But starting something isn’t the same as owning it forever. Industries mature when founders become mentors, mentors become peers, and new participants are given room to contribute. Success isn’t measured by how long you can maintain control. It’s measured by whether what you built can thrive beyond you. The alternative is an industry organized around gatekeepers, where every new idea needs an owner and every successful newcomer owes a permanent debt to the person who first opened a door. I’ve been thinking and writing about these topics for years, long before that recent conversation. What that executive experienced simply reminded me how important they remain. And perhaps they feel especially relevant to me now because, for the first time in my career, I am no longer building someone else’s vision. I am building alongside my team, creating something of our own. Throughout my career, I’ve heard countless discussions about who belongs, who gets access, who gets a seat at the table, and who has the authority to decide. At some point, though, I realized there was another option. You can build your own table.

Today, I no longer need anyone’s permission to sit. More importantly, I have no interest in creating an environment where others need mine. This has only reinforced what I’ve believed for years. Leadership is not ownership; it is stewardship. It is creating opportunities without demanding loyalty in return. It is helping people succeed without believing their success belongs to you. Perhaps the better phrase is this: “I helped you.” That’s a statement of generosity rather than ownership. It acknowledges contribution without claiming control. We all have a role in shaping this industry’s future. None of us gets to decide who matters.

LINDA HYDE

Linda Hyde is the president of the American Association of Private Lenders, the nation’s leading organization dedicated to supporting and advancing the private lending industry. With a deep commitment to professional standards, advocacy, and education, Linda guides AAPL in championing ethical practices, fostering connections, and providing resources to private lenders, brokers, and service providers.

FALL 2026

Advocacy

The Line at 350 The final legislation addresses institutional ownership, affordable housing, zoning, and construction.

MATTHEW GUNTER, CARDINAL CAPITAL GROUP

s you may have read in the Summer 2026 issue, I explained the main facets of the 21st Century Road to Housing Act while it was still proposed legislation. On July 11, 2026, the bill became law without the president’s signature. AAPL’s Government Relations Committee has reviewed the final version, focusing on its implications for private lending and our members. Much of the Act, however, has limited immediate relevance to our segment of the housing industry.

of homes would be regulated. The final bill codified these provisions as Title X, Section 1001, “Home-Ownership for Main Street America.” The Act prohibits “Large Institutional Investors” from purchasing a “Single Family Home,” subject to significant exceptions.

DRAWING THE BOUNDARY

A Large Institutional Investor is a business entity that owns or controls 350 or more single-family homes after the bill’s effective date. In this case, a single family home is a one- or two-unit residential structure.

Our primary interest has been whether and how institutional investors’ ownership

The Act creates several “Excepted Purchases,” generally allowing Large

PRIVATE LENDER BY AAPL

Institutional Investors to acquire homes for new construction or renovation, buildto-rent or renovate-to-rent programs, rent-to-own programs, and certain REO acquisitions tied to foreclosure or workout agreements. The final law also removed the divestiture requirement, meaning investors are no longer required to sell properties within the excepted categories. Nationwide, Large Institutional Investors own approximately 3% to 4% of investorowned homes, while investor-owned homes overall represent less than 20% of the single-family market. Without a divestiture requirement, the practical

effect is likely to be limited. Investors can continue operating within the exceptions, while the 350-home threshold reaches only the largest few organizations. For most AAPL members, the prohibition is therefore unlikely to apply directly.

MORE PROVISIONS, SLOWER OSMOSIS The Act’s remaining provisions largely empower agencies including HUD, Treasury, Agriculture, SBA, and FHFA to conduct studies, establish pilot programs, issue guidance, and develop model codes and regulations. More relevant to private lending are Sections 202, 210, and 303. Section 202 authorizes a two-year HUD pilot providing grants to state and local governments to support qualified landlords and lower-income homeowners with property modifications and repairs. Section 210 establishes a fouryear pilot for grants to convert vacant

and abandoned buildings into low-tomoderate-income housing. Section 303 expands federally backed insurance to certain loans for construction or repairs to accessory dwelling units, increases applicable loan limits, and directs a study of offsite construction, including modular and manufactured homes. Little is likely to change immediately. Grant programs must be formalized, funded, and disbursed; studies must be completed; and agencies must develop rules or recommendations. Much of the Act’s practical impact will emerge gradually through pilot programs and administrative action. AAPL’s Government Relations Committee supports positive housing policy, but the Act is largely focused on consumers and consumer financing, limiting its direct impact on our members. Our focus should remain on how private lending institutions and business-purpose loans

can contribute to the construction and rehabilitation of additional housing, including affordable units. There are opportunities for AAPL and individual members to comment on issues including affordable housing and zoning under Section 107 and modular construction financing under Section 302.

STATES DRAW THEIR OWN LINES The federal law’s restriction on ownership by a defined class of investors also creates a precedent that could be replicated at the state level with lower thresholds or different conditions. A future Congress could expand the restrictions to smaller portfolios, narrow the exceptions, or reinstate divestiture requirements. State legislation demonstrates why the issue warrants continued attention from private lenders and their counsel. Michigan has enacted legislation restricting large institutional investors FALL 2026

Advocacy

from purchasing single-family homes once they exceed a 100-home threshold in the state, with exceptions for certain construction, rehabilitation, and housing activities. The lower threshold demonstrates how a federal framework can become more restrictive at the state level. The law is unlikely to directly affect most private lenders because it regulates ownership and acquisition by institutional portfolios. Its construction and rehabilitation exceptions may also preserve activity relevant to business-purpose lending and housing development.

buy-to-rent investors (those owning 1,000

California and New York have taken different approaches. California has considered restrictions affecting large

this issue or AAPL’s or the GRC’s

Proud Sponsor of the AAPL renovofinancial.com

PRIVATE LENDER BY AAPL

MATTHEW GUNTER

or more properties); while New York has proposed an excise tax on certain large investment entities that fail to reduce their single-family holdings over time, directing proceeds toward down-payment assistance. For private lenders, direct exposure remains limited, although changes to ownership rules can eventually affect

Matthew Gunter is the senior attorney

borrower structures, collateral, transaction

with Cardinal Capital Group. His work

costs, financing terms, underwriting considerations, and exit strategies. Should you have any questions regarding involvement, please contact us at grc@aaplonline.com.

focuses on corporate and loan-level compliance, closing matters, post-closing and foreclosure, and litigation. Gunter has been a member of AAPL’s Government Relations Committee since its inception, serving to bolster relationships with regulatory jurisdictions and ensure regulations are limited and reasonable.

Private Lending News Thank you for making the first 90 days such a success!

30k

Page Views

16k

Subscribers

We keep growing, thanks to our amazing content partners. Check out PLATFORM, Private Lending news, to see videos, articles, and more from:

Find your audience. Find your PLATFORM. findyourplatform.com

FALL 2026

Advocacy

The GAO Wants to Know: Can Private Lending Help Housing? The answer may depend on where the financing gap truly lies; in the construction itself or in the raw land beneath it.

KAT HUNGERFORD, AMERICAN ASSOCIATION OF PRIVATE LENDERS

here comes a point in an industry’s development when the government stops asking whether you exist and starts asking how you work. This is often when the industry discovers that being noticed by Washington is a mixed blessing. For private lending, that moment has arrived in an unexpected form: a U.S. Government Accountability Office (GAO) study exploring whether the federal government should facilitate a secondary market for acquisition, development, and construction (AD&C) loans. This broad mandate offers private lending an opportunity to clarify its role before policies are crafted based on assumptions that may not reflect market realities.

THE MISSING LAYER Congress’ Joint Explanatory Statement, accompanying the 2026 Consolidated Appropriations Act, directed the GAO to assess the feasibility of establishing a government-sponsored secondary market for AD&C loans. This includes evaluating whether government-sponsored enterprises (GSEs) could purchase and securitize a 52

PRIVATE LENDER BY AAPL

subset of these loans. The GAO was also tasked with investigating other federal avenues to boost AD&C capital availability, such as securitization opportunities and Federal Home Loan Bank advances. The GAO sought to understand how the industry defines AD&C, who originates these loans, their typical structures, available data, existing sources of secondary-market liquidity, how lenders manage construction risk, necessary standardization for securitization, and whether increased liquidity would genuinely lead to more loan originations. These foundational questions are critical for understanding a market before deciding if a federal framework is appropriate, and industry input is crucial at this stage. AAPL recently contributed to this conversation, with several subject matter expert members participating in meetings with the GAO. During these discussions, members reported that private lenders originate approximately $25 billion to $50 billion in AD&C loans annually. Lightning Docs’ 2025 loan-level data alone identified roughly $6 billion in

AD&C originations across about 6,700 loans among its platform users.

MIND THE GAP A secondary market for AD&C loans already exists. Liquidity is strongest for singlefamily AD&C and smaller loan balances, with current activity including rated and unrated securitizations, institutional loan purchases, insurance companies, banks, and other capital providers. Essentially, a government-sponsored secondary market would not be walking into an empty room but rearranging the furniture while people are actively doing business. This puts another question on the table: Where does the existing market fall short? The lion’s share of private lenders operates on the construction side of AD&C—after zoning, entitlements, utility connections, roads, drainage, and other foundational elements are in place. The more challenging financing problem, and one of the industry’s real constraints, comes earlier, when the asset is still raw land and the borrower needs capital to create the conditions necessary for construction. Timelines are even less predictable, and the collateral offers limited protection relative to the investment. The result? Few obvious avenues for secondary-market liquidity. Land may represent one of the clearest areas where a government-sponsored program could address a genuine financing gap.

RESISTING UNIFORMITY Regardless of where an AD&C loan sits in the development process, the underlying collateral can change materially along the way. So how much of this process can actually be standardized? Quite a bit, as demonstrated by today’s private FALL 2026

Advocacy

lenders. Standard operating procedures exist for underwriting criteria, appraisal practices, and documentation. Similarly, feasibility reviews, draw procedures, and servicing practices are also moving toward greater consistency. However, standardizing the process does not standardize the project, largely because concrete has never been especially cooperative with spreadsheets. Local permitting, contractor quality, labor markets, material availability, zoning, absorption rates, and the practical competence of the project manager are all situation-specific. This is where a federal program either becomes genuinely useful or simply another layer of bureaucracy.

If eligibility standards accurately reflect the operational expertise and underwriting characteristics required for these loans, a secondary market could broaden participation while preserving discipline. If those standards become a checklist built around what makes an AD&C loan easy to institutionalize, the program could inadvertently exclude the very borrowers it was designed to assist.

ADDING SUBSTANCE The argument for additional secondarymarket liquidity is intuitive: If lenders have greater certainty that qualifying loans can be financed, they can, of course, recycle capital more efficiently.

This provides lenders with more room to originate, reduces pressure on their balance sheets, and could improve pricing. (This is also the part of the theory that fits neatly on a whiteboard.) A secondary market that expands capital access without requiring every borrower to resemble a national homebuilder would be the next necessary step. Most communities—inconveniently for standardization efforts—are not built entirely by five companies. While much of the current financing infrastructure in residential development caters to large participants, smaller developers typically operate at the community level. These developers are often responsible for

Recapture & Retain! Grow Your Business With Deephaven’s Lineup of Equity Advantage Products: • Equity Advantage DSCR Second • Equity Advantage Closed End Second • Equity Advantage Digital HELOC Learn more today! Please visit deephavenmortgage.com or email info@deephavenmortgage.com

PRIVATE LENDER BY AAPL

infill housing, smaller subdivisions, and localized projects that are economically viable but usually lack the scale and operational sophistication preferred by institutional capital providers. The greatest benefit to private lending may come from addressing the segments of development where private capital is most difficult to secure. If public capital were used to cover the early-stage development costs that represent the most significant impediment to financing raw land, it could expand the pool of projects that eventually enter the private construction market. However, there are also reasons to be cautious. A government-backed market introduces the possibility that federal

This raises particular concern for projects most likely to fall outside standardized underwriting. For example, rawland development is precisely where individualized risk assessment can be most crucial. A parcel may have little value under its current zoning but be economically viable with construction that meets a local need. A borrower may have a strong development record without fitting a standardized credit profile. A project may be perfectly sound economically but require a capital structure or timeline that doesn’t fit a standardized federal product. If federal eligibility rules become the market’s reference point, such projects could remain difficult to finance unless private lenders are willing to retain loans that the broader market

eligibility standards could become de facto industry standards. In the conventional market, loans conforming to Fannie Mae or Freddie Mac standards have access to a deeper and more liquid secondary market, providing lenders with an economic incentive to structure originations around these standards, even if a particular loan is not ultimately sold to a GSE. If federal financing for development came with narrow requirements regarding borrower characteristics, loan structures, property types, leverage ratios, appraisal methodologies, or development milestones, these criteria could gradually become the benchmark against which projects are evaluated.

merchantsmtg.com NMLS# 148519

Reliable Capital To Power Your Growth.

Let’s Chat

Fix & Flip DSCR

Multifamily Ground-Up Construction

FALL 2026

Advocacy

perceives as unusually risky, even when actual underwriting suggests otherwise.

BEFORE POLICY HARDENS Major shifts in financial-market infrastructure usually require a catalyst; the 2007–2009 financial crisis is a clear example, leading to interventions that would have been politically challenging under normal market conditions. The current situation differs. While there is indeed a housing shortage, with persistent affordability pressures, elevated construction costs, and an unusually broad—by Washington standards—political consensus that the country needs more housing, there isn’t a pivotal event forcing Congress to create a federal secondary market. Gaining agreement that more housing is needed is considerably easier than securing votes on how, where, and by whom it should be financed. Concurrently, Washington is advocating for more housing and suggesting limitations on certain forms of institutional participation in housing. Witness The 21st Century ROAD to Housing Act, enacted in July with overwhelming bipartisan support. Among its provisions are measures aimed at reducing barriers to housing construction, while also restricting large institutional investors from acquiring additional single-family homes beyond a statutory threshold of 350 properties. In this political climate, private real estate lending can become collateral damage because policymakers, media, and the public frequently group private lending, private equity, and institutional investment into the broad category of “Wall Street.” The GAO study offers the industry a chance to differentiate itself before policy is built on flawed assumptions. A federal secondary-market structure 56

PRIVATE LENDER BY AAPL

would also entail a long list of decisions, particularly concerning risk retention, servicing, securitization, capital requirements, government guarantees, GSE authorities, and taxpayer exposure. Should we expect an AD&C secondary market to materialize in the next legislative session? Hardly. More likely, we are looking at a study, recommendations, further stakeholder engagement, perhaps a pilot program, and eventually some form of legislative or regulatory action—but only if political momentum is sustained. AAPL’s Magic 8-Ball, perhaps the most reliable forecasting tool available, says, “Don’t count on it.”

BETTER SIGHTLINES For AAPL, advocacy in this context is less about lobbying for a governmentbacked secondary market or seeking special treatment for private lenders. Our focus is ensuring that the individuals designing policy genuinely understand the market they are about to influence. This means explaining that AD&C is not a monolithic product, and sharing why a $4 million single-family construction loan has an entirely different liquidity profile than a much larger multifamily development loan. It means explaining why a lender’s construction-management capabilities are as consequential as the borrower’s and project’s financial characteristics. And it also means being forthright about the industry’s weaknesses. There is no unified loan-level dataset for private lending. Policymakers are encountering a market assembled from fragmented information on originations, collateral, valuation, construction economics, and securitization. This makes it harder to grasp the industry’s actual scale and performance—and policymakers cannot

evaluate a market they cannot see. AAPL can help make that market visible. During this engagement, the association identified data providers, ratings agencies, originators, securitization participants, capital markets firms, and secondary-market purchasers who could contribute diverse perspectives. The eventual outcome could be a federal secondary market, a pilot program, a set of recommendations Congress debates for years, or nothing at all. What is predictable is that the questions will continue, and private lenders should not wait until legislation is drafted to explain their business model. Engaging while policymakers are still defining the problem gives AAPL a chance to challenge assumptions before they become policy, connect researchers with market operators, and establish credibility by being candid about both private lending’s capabilities and its limitations. The value of being in the room exists regardless of the outcome.

KAT HUNGERFORD

Kat Hungerford is a digital project manager, operations strategist, and executive editor of Private Lender. With a background in journalism, marketing, and systems design, she oversees initiatives that strengthen AAPL’s programming and infrastructure. AAPL is the oldest and largest national organization representing the private lending profession.

White Label Table Funding Full Technology Suite Back Office Support Concierge Service

FALL 2026

LENDER LIMELIGHT

WITH HUY DO

PRIVATE LENDER BY AAPL

The Guy He Wasn’t Huy Do never chased the version of success everyone expected him to want.

FALL 2026

LENDER LIMELIGHT

WITH HUY DO

ary Wallace, PrideCo’s head

Then came the texts. The calls that became

It was better. Huy describes Gary as “very

of originations, was finally

voicemails. The LinkedIn and Slack

similar to me, high touch,” and “very

taking an actual vacation.

messages. The emails from everywhere.

personable.” He’d turned originations

His usual version of time off meant the golf course and

“like two cigars a round kind of thing.” This

recalled. “But I was very thankful.”

into a broader business development role, handling branding, marketing, and the long-term relationships that

For nearly two decades, Huy has kept the

kept PrideCo connected to brokers and

books running and wheels turning for the

borrowers. “People love him,” Huy said.

Newport Beach family office. Before Gary’s

Gary was also the only one doing it. Huy

2018 hiring, Huy had been the person living

Huy Do, Gary’s boss and PrideCo’s managing

had held the line on staffing a larger team

inside the origination part of the business.

of brokers, partly because of the hiring

member and CEO, slid back into the

Eight years later, he was finding out what

and firing that comes with that model

origination chair he’d occupied years earlier.

happened when somebody else took it over.

and partly because, in the family-office

time was different: Italy and France, with roughly 95 borrowers, brokers, and followups neatly left on a list for his boss to handle.

“I was going to lose my mind,” Huy

PRIVATE LENDER BY AAPL

business, relationships are the wealth.

it was the only Asian restaurant in

Gary had developed his own version

Sioux City—and the entire state. The

of the job, one that Huy could not step

governor was a regular. Then someone

into without suddenly finding himself

opened a second Asian restaurant.

responsible for 95 relationships at once.

Then another. Foot traffic thinned.

The Entrepreneur Who Wasn’t Huy grew up watching his father spot an opening and go after it. When the family

“He had all the energy to get things

This/That Start Something New Improve Something Existing

started—to be first in a new space—but none of the passion to keep it going,” Huy recalls, describing his father as

escaped Vietnam’s political upheaval in the

“scrappy and entrepreneurial.”

1970s to settle in Iowa, his father worked

Huy studied accounting at Pepperdine,

the graveyard shift behind a butcher’s

earned an MBA in entrepreneurship at

counter, where he saw an Asian immigrant

USC, won business-plan competitions,

community with few places to buy familiar

and collected the plaques and prize money

foods. He started an import-export

of an aspiring founder. During the early

business, traveling back to Vietnam and

stages of his career, he rotated jobs on

Thailand to source fresh fruit and other

a timer, working at Arthur Andersen, a

foods, then shipped them to San Francisco

Bluetooth technology company, Aramark,

for distribution to Asian groceries.

and an asset-based lending fund.

For a decade, the math worked. But fresh

“I had been a two-year guy,” Huy said.

food was too vulnerable to contamination

“It took me a year to understand what

in transit, so he shifted to canned goods.

was going on. It took me a year to try to

His competitors flew the produce in.

innovate things. Then I was good.”

So he pivoted again: restaurants,

Eventually, the pattern stopped reading like

then a bakery. His first restaurant was

restlessness in search of an entrepreneurial

simply called “Chinese Food” because

calling and started resembling a signature.

Small Group Large Room Generalist Specialist Early Decision Delayed Decision Tradition Experimentation Follow Curiosity Follow the Plan Mentor Mentee Build Relationships Build Systems Compete Collaborate

“I just wasn’t the guy. I would take the guy’s creation and help grow that.”

Lead From the Front Lead From Behind Mountains Ocean Campsite Hotel FALL 2026

LENDER LIMELIGHT

WITH HUY DO

#WorthIt

“I just wasn’t the guy,” he said. “I would take

bad? What if everything froze? What if he

the guy’s creation and help grow that.”

ended up working the loans out himself?

A book you’ve given away multiple times.

The Number He Didn’t Chase When Huy joined PrideCo in 2008, he had

people’s money. Huy had a fiduciary

Living Forward by

to learn how to operate inside a family

responsibility there, too. So what made

Michael Hyatt

office, including Googling what one

the outside investor feel heavier?

actually was. “I’m not a Gen 2 or Gen 3,

He paused.

A place everyone should visit at least once.

but I work for the family,” he explained.

Murren, Switzerland

would manage the family’s wealth after

Huy was there to help build the engine that the sale of a 30-year-old manufacturing

A life skill more people should learn.

business precipitated PrideCo’s launch

Be humble

handle accounting, investments, estate

three years earlier. He would go on to administration, and the search for

A documentary worth watching. Last Dance

investment vehicles to protect and grow

Take lunches with people with no agenda

A meal worth traveling for.

“With the family, you know the whole picture,” Huy explained. With outside investors, he could see the money they had committed, but not the rest of the balance sheet. He could only make sure the piece in his hands didn’t go bad.

said, describing himself as someone

because it was like, okay, everybody else

who can spend too much time “counting the nickels and missing the

is doing it,” he recalls. “Every wealthy

dollars or $100 bills out there.”

family has made a hard money loan,

When he looks at peers who started in

right? So we might as well do it too. And

the same place, he can see a PrideCo that

then it’s like, I think this is a business.”

never left the pro forma. It’s the “could-

Initially, Huy was every guy on the org

haves”: raising outside capital, pursuing

in Tre Cime di Lavaredo;

depositing checks, driving out to properties.

italian dolomites

Then came the fund in 2010.

acquisitions, or simply pushing harder on growth. He can list the levers he chose not to pull, including hiring more originators, entering new markets, or following the

“When I took on the first outside money for

consolidation strategies many lenders

the lending fund, it was nerve-wracking,”

adopted during periods of rapid growth.

Huy said. “I had a fiduciary responsibility, never wanted to lose money.” He knew the families, and even though they had

said. “And I wish I would have.

“I’m probably too risk-averse,” he

chart—originating, underwriting, servicing,

Be curious

“I didn’t look at it like that,” he

one line on a much longer ledger.

Spaghetti at the first hut

A piece of advice that aged well.

thread. The family office was also other

the family’s wealth. Private lending became “So we got into real estate lending

A habit that improved your life.

I kept snagging on the same loose

“I could have been 10x,” Huy said.

The Compromises He Refused

A purchase under $100 that gets constant use.

substantial wealth, they were entrusting him with a $5 million or $10 million

On paper, the number reads like the setup

Magnetic cell phone

investment. He was still learning the

to a sports-injury story. Huy, however, is

holder for the car

lending market. What if the deals went

thinking about something else entirely.

PRIVATE LENDER BY AAPL

People have been able to further their careers, see a higher ceiling, and then also build things where I don’t have to be the one that is coming up with the idea.

FALL 2026

LENDER LIMELIGHT

WITH HUY DO

Strong Opinions

At Arthur Anderson, Huy worked

that for me. And I’ve specifically designed

80 to 120 hours a week. He covered

my office and my life to not reflect that.”

roughly 25,000 miles and four time zones a month at Aramark. He was single then, and he knows that was part of what made the pace possible.

Something overrated?

He had also grown up watching what that

Being productive

high school (although he cheerfully itemizes

pace could cost. Huy played basketball in his contribution as “benchwarmer”). His

Something underrated?

team was good enough to rank No. 24 in the

Being flexible

my dad going to one basketball game in

country and No. 2 in the state. “I remember my whole high school career,” he added.

A hill you’ll die on? Everyone has a story; treat everyone with dignity.

A common piece of advice you disagree with? Never give up.

A habit more people should adopt?

“He was working as hard as he could because he was an immigrant, trying to provide a life for me,” Huy recalls. What stayed with him was the arithmetic of

Huy has already done the math on what a 10x ambition could cost in time. Now he’s trying to make sure there’s still headroom for others. “The challenge for me is trying to figure out programmatically how to grow in order to have a better ceiling for my team,” he said. “You know, they don’t want to work at a stagnating business that only meets the needs. They want to see how they can excel.” When Huy talks about Bergen Meyer, PrideCo’s loan operations manager, he skips past the job he thought he was hiring for—someone to keep the seat filled—and goes straight to the operation she built

the absences: His father spent years

instead. He knew of her through her

traveling around the world to build

husband, a loan broker he once tried to

businesses, which meant missing

hire, and kept track of the family. When

much of his son’s key moments.

another employee left, he hired Bergen.

So Huy set a ceiling on his own ambition—

Three years later, the rehab-management

the one place he’s ever deliberately built

operation is, in his words, “light years

one. He calls himself a “max two-night

different than what I created.”

away kind of guy” and a “once-a-month traveler.” A two-hour flight is the outer

Then he ticks through the details. Bergen tests assumptions against the company’s

Empathy.

limit. Vegas works. Miami or New

A technology people

“Anywhere further, I send Gary,” he said.

and payments, and builds processes

rely on too much?

Huy has designed his career to

around property taxes, insurance,

ChatGPT/Claude

to miss, and he wants the people

There is one small recurring snag in

around him to have the same.

interviewing Huy Do for a story about Huy

York gets handed to someone else.

leave room for the things he refuses

accumulated data, compares budgets as projects change, tracks inspections

and the people doing the work.

Do: getting Huy Do to talk about Huy Do.

A skill everyone

“Take your vacations, use your PTO, take

should develop?

your time, attend your concerts and your

Ask him about himself, and the

games,” he said. “I don’t want to stand in

conversation has a way of migrating

Understanding peoples motives

the middle of that because I don’t want

toward somebody else.

PRIVATE LENDER BY AAPL

The Details He Won’t Forget

“That guy’s looking for trades, looking

clean this up and clean that up... it’s

to make money in AUM,” he remembers

idiotic. I’m paying dollars for it to be

thinking. “Probably not a guy that

someone else’s, but it feels great.”

we would invest with long term.”

“People have been able to further their

were good at, where they struggled, and

Reading other people’s patterns is second

careers, see a higher ceiling, and then

what actually seemed to matter to them.

nature. The harder work is deciding what

also build things where I don’t have

to do with those he sees in himself.

to be the one that is coming up with

It’s in his job description to watch founders make decisions, then track what happens after the transaction is over: what they

He says he’s stopped worrying about being the person at the center of the room and started paying closer attention to the people already in it. He collects two or three details, files them under a name, and never misplaces them again. “Everything becomes relational,” he explained. Huy makes it sound almost clinical. In practice, it’s remarkably personal. Before the interview really began, Huy opened our conversation by asking about recent camping trips with the kids, remembered I had moved, and

the idea or anything like that,” he said,

The Things He Won’t Fix

speaking of what he considers his top

When something goes sideways with his

innovating the business without me.”

kids, “I’m on it right now.” He remembers an issue involving one of his teenagers when his first impulse was to call the parents, intervene, and solve it. His wife talked him off the ledge. “Let’s let it play out for a couple of days or a week,” she told him. That instinct follows him to work. Huy admits that, in his own mind, he does “the best job ever.”

wanted to hear about the greyhound,

“I will grind it out and make it work,”

Daisy, we recently adopted.

he said. “And other people won’t do it as

“I remember a couple things that make you different or special or stand out to me,” he says, and then self-deprecatingly, “And then I’ll ride that as long as I can.” For Huy, the deal and the person attached to it are part of the same story. “There’s transaction,” he said, “but on the other side, you’ve got the human stories.” He remembers a hedge-fund manager whose fund lost roughly 30% of its assets during the financial crisis, dropping from $500 million to $350 million. Six months later, Huy saw him again. The fund was bigger, the suit

well. I would have formatted Excel better, something stupid like that, right? Or I

accomplishment. “They’re actually

Somewhere in Europe, Gary Wallace was still on vacation, and Huy Do was discovering what his own success looked like from the wrong side of the desk: staring at a list of 95 names and wondering how he was going to survive the week. Huy didn’t need to reclaim the origination chair to do “the best job ever.” He’d built an organization where Gary could make himself the guy for that.

KAT HUNGERFORD

would have said it in a different way— there’s nuance to how you send emails.” One of PrideCo’s people is, as Huy puts it, “heavy paper.” Consolidations, QuickBooks, everything gets printed. In a digital world, that slows the pace considerably. “It would take me 30 minutes to do. And so, I’m like—I think I’m done,” Huy said. But PrideCo’s cofounder and Gen 2 in

Kat Hungerford is a digital project manager, operations strategist, and executive editor of Private Lender. With a background in journalism, marketing, and

the family advised he give it time. And

systems design, she oversees initiatives

that’s turned out to be a good thing.

that strengthen AAPL’s programming and

was nicer, the Rolex was more expensive,

If Huy touches it, his 30 minutes is

and the business card had changed.

never just 30 minutes. “I’m going to

infrastructure. AAPL is the oldest and largest national organization representing the private lending profession.

FALL 2026

Technology

SPONSORED CONTENT

Don’t Let the Demo Make the Decision The real test is what happens when the file falls outside what the system knows, and whether a lender can explain the decision.

AKHIL SAHAI, THE MORTGAGE OFFICE

ou have almost certainly sat through demos where someone showed you a chatbot reading a rent roll in seconds or a dashboard that identified risky loans. It appeared to be the future of underwriting, but a hard question got a sales-script answer instead of a real explanation. That’s worth paying attention to, since private lending is fundamentally a relationship business. When a loan defaults, the responsibility falls on you, not the vendor.

process it touches. Map the work before you map the technology: Where does a processor spend their morning, or an underwriter lose time waiting on information instead of evaluating it? Judge any AI capability against that baseline, not a demo. If a vendor cannot describe which task their system improves and what that looked like before, you don’t know enough to evaluate it.

Most private lenders are already testing and using AI; however, adoption has been inconsistent. AI-washing is also underway. Some solutions labeled as AI are simply rules engines with a new coat of paint, while others are true AI models that extract and process documents for the first time. Some systems make decisions, while others only prepare information for human review. These distinctions are critical for managing risk, meeting compliance obligations, and serving borrowers effectively.

ASK WHERE JUDGMENT LIVES

Before adopting, building, or evaluating an AI tool, ask these questions first.

START WITH THE WORK, NOT THE TECHNOLOGY The first question isn’t what the AI can do, but rather what part of your 66

PRIVATE LENDER BY AAPL

The most important question about any AI capability is whether it makes decisions or prepares information for a human to decide. Extracting data or flagging inconsistencies supports a decision; approving a loan or waiving a condition makes one. Private lending relies on human judgment. AI should accelerate your ability to reach sound judgments, not replace them.

DEMAND AN EXPLANATION, NOT JUST AN OUTPUT A recommendation without a reason is not useful, and in lending it can be a liability. If a system flags a loan as high risk or suggests a borrower’s income doesn’t support the debt service requested, you should be able to ask why:

which document it used, which policy it applied, what threshold it compared against. That’s the difference between a defensible tool and one you can’t explain to an examiner. If the honest answer is that the model just knows, treat that as a warning sign, not a feature.

UNDERSTAND WHAT HAPPENS AT THE EDGES Sooner or later, every AI system runs into something it wasn’t built for: a rent roll exported from software it’s never seen before, a wire on a bank statement that doesn’t match the down payment on paper, a rehab budget missing a line item the model expects. What happens next matters more than anything you heard in the pitch. Does it guess and hand you a number that looks fine but isn’t, or does it recognize it’s out of its depth and hand off to a person? You want the second one. A system that admits what it doesn’t know is worth more than one that never lets on.

ASK HOW INFORMATION TRAVELS Picture how most shops actually run: An origination system underwrites the deal, then hands the loan off to servicing, often on a different platform, sometimes

a different team. If that loan defaults and moves to asset management, that team starts over too. That’s a point solution: functional within its own walls, useless outside them. A foundational solution means that context (borrower’s history, property file, prior exceptions, etc.) follows the loan through every handoff instead of resetting. So don’t ask a vendor if their AI is smart. Ask if it forgets everything the moment the loan changes desks.

WEIGH AUTONOMY AGAINST ACCOUNTABILITY In a private lending shop, plenty of AI work is low stakes by nature: pulling numbers off a rent roll, flagging that two documents show different addresses, reminding someone an insurance certificate expired. Get that wrong, and someone double-checks it; no money moves. Material risk is different. It’s the stuff where a bad call actually costs someone money or exposes the fund to a loss: approving a draw request on a construction loan, waiving a title exception, extending a maturity date, deciding a borrower’s financials are strong enough to fund without extra reserves. That’s where letting a system act on

its own, instead of preparing the call, goes wrong quietly, not loudly. A wrong data extraction gets caught. A wrong autonomous decision on a draw or a waiver might not surface until the loan is already underwater. That’s the distinction worth drawing: Automate the busy work freely but keep a person between the system and anything touching capital.

Our AI-first team in the Bay Area has been building for the real complexities of private lending, not the simplified version. Get in touch; we’d love to share our experience and latest innovations.

AKHIL SAHAI

THE STANDARD DOES NOT CHANGE None of this is a reason to move slowly. It’s a reason to move deliberately. AI is going to change how private lending operates, likely more than any previous technology. It’s not just time saved but what you can now take on: more loan volume with the team you already have, or a product line that once took a year to ramp into, now done in a quarter. Yet the standard you already hold your organization to (sound judgment, clear accountability, a defensible record of every material decision) doesn’t get suspended because a new tool arrived to help you meet it. Ask these questions of every AI capability that touches your loans. The lenders who ask them early will be best positioned to reap AI’s benefits, not simply the ones who got there first.

Akhil Sahai, PhD, MBA, is chief AI and product officer at The Mortgage Office, where he leads AI and product strategy for private lenders and loan servicers. Sahai brings two decades of enterprise software and AI leadership, including chief product officer at LexisNexis, where he oversaw a $500 million portfolio, and head of product roles at HP, Dell, and VMware. Sahai was a founding chief product officer at Kanverse.ai and held head-of-product roles at Perspica and Gale Technologies. He holds a PhD in computer science from INRIA France, an MBA from Wharton, and 17 U.S. patents.

FALL 2026

Technology

PRIVATE LENDER BY AAPL

FALL 2026

Technology

What Your Portfolio is Hiding From You AI can help surface signals without replacing systems or judgment.

MARK DUSSEAU, STARTERSTACK.AI

our portfolio data lives in too many places at once. It sits across your LOS or LMS, shared drives, email threads, exception logs, and spreadsheets that get updated just slowly enough to miss the moment when risk starts to show up. You need a way to talk to your data directly so you can spot concentration risk, performance issues, and anomalies before they become problems that show up in committee a month later. That is where AI becomes useful—if you use it the right way. Workflows should help you move faster, ask better questions, and get to risk signals sooner. They’re not a replacement for underwriting judgment, and ChatGPT or Claude should never be your system of record. In this article, you will learn how to set up a simple, repeatable system for using AI to analyze your lending portfolio, using the tools you already have on your desktop. The process is anchored in concrete workflows like how to pull data from your LOS or LMS, upload loan tapes, query bank statements, and turn those into risk insights you can act on. The goal is to create a practical portfolio analysis layer on top of the systems you already run.

PRIVATE LENDER BY AAPL

START WITH THE RIGHT MINDSET Before you upload a single file, you need to be clear about what AI can and cannot do for you. It can help you structure messy loan data, identify outliers, standardize information across documents, and surface trends that would otherwise take hours to find manually. It cannot replace your judgment, your credit policy, or the core systems where your actual portfolio lives. AI works best as an analysis layer, not as a permanent source of truth. If you treat it like an overconfident analyst instead of an all-knowing platform, you will get more value from it and make fewer mistakes. Your job is still to decide what matters, what deserves escalation, and what action to take. In practice, that means you should use AI to accelerate tasks like portfolio reviews, deal pattern detection, risk summaries, and document extraction. You should not use it as the place where loan data is stored, maintained, or governed. The model helps you interrogate the data; your LOS, LMS, CRM, and servicing stack still hold the official record.

USE THE BEST TOOL FOR THE JOB The most common tools in use are ChatGPT, Claude, Gemini, and Perplexity.

FALL 2026

Technology

Your best-case scenario is to be AI agnostic; each one has strengths and a specific place in your workflow (see figure below). CHATGPT is strong for advanced data

analysis and can connect to outside systems through APIs or MCP-style integrations. CLAUDE is especially useful for report

generation, spreadsheet work, and file-based workflows, especially when you are dealing with long context and multiple documents. GEMINI can be helpful if much of

your work already lives in Google Docs or Google Sheets. PERPLEXITY is especially strong when you need deep research or want multiple model perspectives on an analysis.

For your first pass, you only need a tool that can accept a CSV, PDF, or spreadsheet and return a structured answer. Once you prove the workflow on an export, you can move toward more integrated setups using APIs or MCPs so the AI is working on live or near-live data instead of one-off files. Decide Your Data Integration Method One of the first ways AI goes wrong in portfolio analysis is when the model does

not have the right data. If you want reliable outputs, you need to understand how the system is accessing information before you ever ask it to calculate anything. Here are four practical paths you can use: DIRECT UPLOAD. You export a loan tape

as a CSV, or upload a PDF like a bank statement, rent roll, or application file directly into a chat. This is best for oneoff analysis or initial experimentation. WEB SCRAPING. You use automation to

pull information from a website or portal that does not expose a clean API. This can work well when the information is public or credentialed and browser-based. API INTEGRATION. You connect the model

to a system that already has structured data, like your LOS or servicing platform. In that setup, the model can request information more deterministically instead of guessing from text. MCP INTEGRATION. Model Context

Protocol gives the AI a structured way to understand how to pull data from a connected tool. MCP is framed as a likely future state for many lending operations because it lets you connect models to business systems more naturally.

If you are just getting started, direct uploads are enough. But if you want AI to become part of a durable underwriting or asset management workflow, API and MCP integrations are where the real leverage starts to show up.

USE THE SAME PROMPT FRAMEWORK EVERY TIME For better output, you need to structure every request around four parts: context, data, task, and format. This framework makes your AI requests consistent across tools and use cases. You don’t need to sound technical, but clarity is a must. CONTEXT. Tell the model who it is supposed to be by giving it an identity, standard, and frame for judgment. If you tell the model to act like a chief risk officer or a senior asset manager preparing an executive assessment, it will organize the response around priorities for that lending role.

“Act as a chief risk officer at a non-bank lender, producing a high-level executive risk assessment of this portfolio. Your analysis must be professional, data-driven, objective, and focused on actions that reduce risk.”

AI PLATFORMS AND USE CASES TOOL

BEST USE CASE

MAIN CAUTION

ChatGPT

Advanced analysis, API-connected workflows,

Double-check financial math and assumptions.

and structured calculations. Claude

Gemini

Writing reports, reviewing files, working through

Some file and connector features

long documents and spreadsheets.

depend on desktop workflows.

Light analysis inside Google Docs and Sheets.

Less flexible for more advanced integrations.

Research, borrower lookups, and comparing

Less suited to being your core internal workflow engine.

(Recommended) Perplexity

multiple model perspectives.

PRIVATE LENDER BY AAPL

DATA. Tell the model what data it has access

to so it can accurately interpret columns and how far it should go in its claims. (Do not assume it understands the file just because you uploaded it.) Explicitly state what the file is, what fields are included, and whether there are limitations or missing values. “You have access to a CSV loan tape with approximately 150 records. Fields include funded date, state, product type, current balance, underwriting status, default status, and portfolio performance indicators.” TASK. Give the model one clear job (and it

should not just be “analyze my portfolio”). Performance drops as complexity rises, so you will get better results if you give it narrow, specific objectives. “Your tasks are to: 1. Identify geographic concentration risk by state. 2. Find product-level default or delinquency trends. 3. Highlight any industry or borrower segments with unusual performance. 4. Flag concentrations that exceed [X] threshold.” FORMAT. Decide how you want the

answer returned; otherwise, you’re likely to get a generic block of text. This makes it easier to reuse prompts and move the output into your normal workflow. “Deliver the results as a CSV-ready table for downstream use, with a short executive summary.”

RUN YOUR FIRST PORTFOLIO ANALYSIS For your first attempt, it’s better to see how the model handles imperfect but realistic data. EXPORT A LOAN TAPE WITH THE CORE FIELDS YOU CARE ABOUT. This may include funded date, current balance, state, status, product type, and any risk or performance markers you already track. Before using your structured prompt, upload the file into

FALL 2026

Technology

your AI tool of choice and ask it to confirm the columns it sees to reduce the chance it misreads or ignores part of the dataset. AFTER YOU’VE VERIFIED THE MODEL CAN READ THE DATA, USE YOUR STRUCTURED PROMPT. From the results, ask the model

to show how it got the answer, including what fields it used, the formulas applied, and any assumptions made during the calculation. That second pass is critical to turning the model from a black box into something you can review.

VERIFY THE ANSWER Even when the output looks polished and you’ve made it show its work, you still need to pressure-test the reasoning behind it. METHOD 1. Ask the model to critique its

own report from a different perspective. For example, after it produces an executive risk assessment, ask it to act as an internal audit lead or portfolio review committee member to identify 74

PRIVATE LENDER BY AAPL

gaps, weak assumptions, methodological flaws, or unsupported conclusions. This type of critique will surface issues around severity metrics and completeness. METHOD 2. Take the same file or analysis

into another model and ask for a second opinion. This is most useful when you are analyzing a segment of the portfolio that could drive a credit decision, a reserve change, or a workout strategy. If two or three models disagree, that is usually a signal that you need to look closer at their assumptions or reasoning. The idea here is that models working off the same assumptions should get close to the same results. If their responses are distinctly different, then you’ll want to better understand their reasoning, which you can ask the model about, along with the assumptions it used to reach its conclusion. The verification step is also where a research-first tool can help.

USE JSON WHEN PRECISION MATTERS If you are extracting information from documents, one of the most practical tactics is to use JSON as a translation layer. Models are typically better at following a schema than they are at inventing a clean structure. Say you want to extract transactions from a bank statement. Instead of asking for a general summary, ask the model to produce a JSON schema first: account holder, statement period, opening balance, closing balance, and an array of transactions with date, description, amount, and balance. Once the schema looks right, save it. From there, you can reuse that schema every time you analyze a similar document. That gives you a repeatable way to turn PDFs and messy files into structured data you can validate, compare, and analyze at the portfolio level. This is especially useful when you are dealing with recurring document types like bank statements, rent rolls, applications, T-12s, or underwriting packages.

usable output. The goal is a repeatable operating layer that helps you ask better questions of your own portfolio. Over time, you can turn that into an AI workflow that looks like this: 1 EXPORT OR CONNECT THE PORTFOLIO DATA SOURCE.

2 RUN A STANDARD RISK REVIEW PROMPT.

3 ASK FOR FORMULAS, ASSUMPTIONS, AND SOURCE FIELDS.

4 RUN A CRITIQUE PROMPT OR SECOND-MODEL REVIEW.

5 SAVE THE OUTPUT INTO YOUR REVIEW PROCESS, COMMITTEE MATERIALS, OR MONITORING CADENCE.

The broader lesson is that when precision matters, you should reduce ambiguity. JSON schemas, clearly defined fields, and narrow extraction tasks are all ways of doing that.

PAY ATTENTION TO SECURITY AND PRIVACY You cannot think about AI use without thinking about privacy, security, and where risk sits in the workflow. In addition to the model itself, risk can live in the connector (API, MCP, or integration layer) you are using. Enterprise APIs and trusted platforms may give you privacy guarantees and stronger controls, while free-tier consumer tools may not. That matters even more with MCPs and third-party connectors. If the source is trusted and well-maintained, the integration may be appropriate. If it is a random project discovered on GitHub or social media, that is not the place to start when your files include personal or financial information.

The easy rule to follow: If you cannot verify who built a connector or how it handles data, you should not put identifying borrower information through it.

SAMPLE PROMPTS Below are sample prompts you can use as-is or adjust to fit your workflow. PROMPT 1: FIRST-PASS PORTFOLIO RISK

One practical workaround is to test workflows on synthetic or “dummy” data first. Synthetic data can be used for experimentation because it lets you develop prompts and schemas safely before you touch production information.

REVIEW. This is a strong opener to keep

BUILD A REPEATABLE WORKFLOW

The file I uploaded is a loan tape.

After you fine-tune the prompts and schemas that work best for your operations, it’s time to use them repeatedly across your portfolio by building an internal library of proven prompts. Quality results become valuable operating assets over time.

Treat all data as highly sensitive.

A good start is to include a risk assessment prompt, a bank statement extraction schema, a borrower summary template, or anything else that consistently gives you

things practical, narrow, and easy to review, while forcing the model to show its work. “Act as a chief risk officer at a non-bank lender. You are reviewing a portfolio export for an underwriting and asset management team.

Your task is to: 1. Identify top geographic concentrations by state. 2. Identify the top product concentrations. 3. Identify any default or delinquency patterns. 4. Highlight any segment that appears over-concentrated or underperforming. Use only the uploaded file. If something is missing, say that clearly instead of assuming. FALL 2026

Technology

“Instead of searching through spreadsheets, loan tapes, and documents one at a time, you can ask questions across the entire portfolio.”

Return the answer in this format: - A 5-bullet executive summary - A table of key findings - A short list of recommended questions - A section called “How I calculated this” that shows formulas, fields used, and assumptions” PROMPT 2: EARLY WARNING SIGNAL REVIEW. This is useful when you want the

model to think like an asset manager. It also keeps the output focused on monitoring. “Act as a senior asset manager reviewing this portfolio for early warning signals. Using only the uploaded file, identify loans or segments that may need closer monitoring.

Be direct and critical. Do not defend the earlier answer.”

After I approve the schema, extract the data using that exact schema.

Focus on patterns such as rising delinquency, concentration by geography, unusual performance changes, or any outlier behavior.

PROMPT 4: BORROWER OR SEGMENT

Do not add fields that are not in the schema.

Do not give me a broad essay. Give me: 1. The top 5 early warning signals 2. Why each one matters 3. What additional data I should check next 4. A confidence level for each finding: high, medium, or low If the data does not support a conclusion, say so clearly.” PROMPT 3: MAKE THE MODEL VERIFY ITSELF. You can use AI to quality

assure AI before you bring the analysis into your actual review process. “Review your prior analysis as if you are an internal audit lead. Your job is to critique the analysis you just produced. Identify: 1. Assumptions that may be weak or unsupported 2. Calculations that should be verified manually 3. Important risk factors you may have missed 4. Places where the data may have been interpreted incorrectly 76

PRIVATE LENDER BY AAPL

SUMMARY. This is especially useful when you need to communicate findings upward or across teams without a technical memo.

“Act as a senior underwriter. Using the uploaded materials, create a plainEnglish summary of this borrower or borrower segment for a non-technical credit team. I want you to cover what: - This borrower or segment looks like overall - Strengths stand out - Risks stand out - Documents or data points I should verify next Return the answer in clear business language with short sections and no jargon.”

If a field is missing, return null.”

MARK DUSSEAU

Mark Dusseau is a co-founder of Starterstack.ai, where he works with non-bank lenders to automate

PROMPT 5: BANK STATEMENT EXTRACTION

underwriting, eliminate manual

WITH STRUCTURE. This type of schema

bottlenecks, and monitor portfolio risk in

can be used to produce more consistent output across repeating document types.

real time. Dusseau is a technical founder

“I want to extract structured data from the uploaded bank statement. First, propose a JSON schema for the information that should be captured, including: - Account information - Statement summary - Transactions

and data scientist turned product leader with deep roots in finance. His background includes experience at Ernst & Young and engineering work alongside Two Sigma. Dusseau’s work has driven over $500 million in revenue across startups, small businesses, and midmarket companies. He is also an active investor in technology startups.

TAKE LICENSING

OFF YOUR PLATE We handle the filings, renewals and state requirements, so your team doesn’t have to.

GET STARTED

28 YEARS. 525K+ FILINGS. Proven results. Lasting Partnerships. LICENSING | BONDS | INSURANCE

cornerstonelicensing.com (866) 321-4192

Technology built for the realities of construction lending. Most platforms have their process. We adapt to yours.

OUR SERVICES

Budget Analysis & Pre-Construction Reviews Feasibility Reports Contractor Evaluation Fund Control & Disbursements Inspections

• • • •

Faster draw approvals with real-time visibility Centralized collaboration for lenders, borrowers, inspectors, and vendors Flexible inspection workflows Audit-ready reporting

Full Transparency Lender, borrower, contractor — aligned.

300+

LENDING PARTNERS

PROTECT EVERY DOLLAR. ACCELERATE EVERY DRAW. Licensed fund control built for modern construction lenders. Real-time visibility for every party, and Per-Draw Pricing. Workflows that scale with you.

$15B

IN COMPLETED PROJECTS

Scan for more information

www.lmfce.com

125+ Years OF EXPERIENCE (619) 644-8500 getstarted@lmfce.com

FALL 2026

Case Study

Power Lost, Options Preserved on Memphis 4-Unit A parallel approach shortened the path from court approval to closing and helped limit the lender’s loss.

SUSAN NAFTULIN, REHAB FINANCIAL GROUP

four-unit residential property in Memphis had finally finished construction, but on a much longer timeline than Rehab Financial Group’s original loan term, incurring substantial extension fees. Then the borrower stopped making the monthly interest payments. All attempts at contact failed, so the file headed to foreclosure. Simultaneously, we looked for another existing customer interested in buying the defaulting property, with RFG extending advantageous terms to encourage the sale. The hunt didn’t pan out, so foreclosure continued. Then, the borrower filed for Chapter 7, which immediately froze foreclosure. The bankruptcy materials painted a fuller picture of what had happened:

PRIVATE LENDER BY AAPL

Between unpaid interest and extension fees, the borrower realized he lacked equity in the property, so he stopped paying and filed for bankruptcy. It was at this point that I truly wished the borrower had picked up his phone or answered an email. The bankruptcy statements pointed to the borrower being willing to surrender the property, and further, the property’s four units were all occupied. The situation supported a short payoff or a deed in lieu of foreclosure, but we never had the opportunity to make the offer. We reached out to the borrower’s attorney and the Chapter 7 trustee to see if we could still get a deed in lieu of foreclosure for the property, subject to approval by the court. Neither had any objection but left it to us to deal directly with the

borrower. This time around the attorney convinced the borrower to talk to us, and he agreed on the deed in lieu. Even so, we faced several hurdles before the deed could be delivered and recorded. Here’s how the whole thing unfolded. First up: Take a closer look at the equity situation, in this case, the proof that there was none. The court was unlikely to approve a deed in lieu where RFG stood to gain any excess value over the amount owed to us, especially if there were other creditors in play on the bankruptcy. Accordingly, we needed a current appraisal and payoff amount. For our own protection, we also needed to ensure there were no subordinate liens that would remain as title encumbrances after filing the deed in lieu. Junior lienholders would be likely to object to any attempts to request the

court permit a filing free of encumbrances, which would put us back at square one with foreclosure as the best option. RFG came out ahead on both counts: no equity and clear title. With the court requirements satisfied and no objection from the Chapter 7 trustee, we filed the motion to approve deed delivery. The second step was streamlining the transition to REO, which included confirming unit occupancy, identifying the actual tenants and their leasing terms, and determining property condition. With the borrower now communicating, we quickly had the property manager’s information. And it’s here we hit the jackpot—the property manager was the same realtor who originally sold the property to the borrower. Interested in a double win of continuing the management fees and being the listing agent for RFG’s planned sale of the property, she provided a host of details. Copies of the leases, rent rolls, and current property condition were part of the package, and showed both good cash flow and no immediate maintenance or other issues. Step three—and where we continued our luck—was restarting our hunt for a buyer, but now with a local, informed, and motivated realtor on board. She launched a search among her investor contacts.

Considering we did all this while still waiting on the court’s approval for the deed in lieu, it might look like putting the cart before the horse—but being prepared to start immediately receiving rents and readying for sale weighed the risk as being well worth it. Thirty days after filing the motion, the court approved the deed in lieu, and 15 days later we had the property on the market. Two weeks after that, we had a firm offer from one of the realtor’s investor contacts, followed by a week of negotiations and closing in 6 weeks. Part of the negotiation involved our willingness to lower the purchase price if the buyer financed through RFG—a compromise that worked because the new borrower was well-qualified with strong cash, credit, and income. Minimizing our loss on the property was that RFG received about 3 months’ rent prior to the property’s sale date, along with the borrower costs at closing. While there was plenty of good fortune mixed in, a lot of it came about through better planning. We didn’t wait on the court before getting our ducks in a row, allowing quick disposal of the asset. We maintained professional and respectful lines of communication with all parties, which helped the borrower (eventually) see us as less of his opposition. We didn’t shortchange the property-manager-

slash-realtor on compensation, keeping her a stakeholder on both the property’s condition and its eventual sale. Handling defaults is never fun. It’s normal for borrowers to avoid speaking with you— even when it’s to their own detriment. In an adversarial environment, we’ve found it’s both less headache and less costly to set aside personal feelings and keep the phone lines open. Cooperation can start at any point—and better late than never.

SUSAN NAFTULIN

Susan Naftulin is president and managing member of Rehab Financial Group, LP, a company she co-founded. Naftulin’s mortgage lending expertise derives from senior management positions, including general counsel, managing attorney, chief operating officer, and senior vice president for privately and publicly held mortgage lenders. In these roles, she oversaw loan origination and documentation, regulatory compliance, servicing, default and litigation management, and human resources.

FALL 2026

Operations

The 15-Minute Deal Screen Disciplined triage can expose structural problems, unsupported exits, and obvious sponsor mismatches before full underwriting begins.

MICHAEL BARNETT, LOANSPARK

PRIVATE LENDER BY AAPL

n two decades of commercial lending, the most expensive mistakes I’ve seen trace back to sequencing: Teams spend days underwriting deals that should have been declined almost immediately. The leverage was never viable, the sponsor lacked sufficient experience for the plan, or the exit hinged on unlikely cap rate compression or a refi market that was improbable given the asset class and timeline. Thorough underwriting is costly, consuming time, third-party fees, and

pipeline bandwidth better spent on strong opportunities. With more deals coming in, the solution isn’t cheaper underwriting, but rather an effective triage process before any underwriting begins. Here’s my five-screen triage method. Each question falls into one of three categories: information already gathered during intake, a parameter your firm has already established, or a reason to flag the file for research that isn’t part of this initial review. Most importantly, the moment

a question requires you to perform that research, it ceases to be triage.

SCREEN 1: SCREENABLE, OR STILL A CONVERSATION? (2 MINUTES) Before evaluating the request, confirm the file provides enough information for a responsible assessment. If any item is missing, the deal isn’t necessarily weak; the file is incomplete. Address these gaps with the sponsor before FALL 2026

Operations

dedicating more time to the deal. At minimum, you’ll need the following:

» PROPERTY TYPE AND LOCATION » PURCHASE PRICE OR CURRENT/AS-IS VALUE

» » BASIC INCOME PICTURE, IF THE CURRENT ASSET STATUS

PROPERTY IS OPERATING

» REQUESTED LOAN AMOUNT AND USE OF PROCEEDS

» PROPOSED LOAN STRUCTURE » PROPOSED EXIT » SPONSOR IDENTITY VERIFICATION AND STANDARD BACKGROUND CHECK

» SPONSOR HISTORY/EXPERIENCE AND CURRENT FINANCIAL PICTURE

SCREEN 2: DOES THE STORY HOLD UP? (3 MINUTES) This is about pattern recognition, not indepth analysis. Most originators already have a general sense of stabilization windows and standard structures by asset class. If you don’t, create a onepage reference sheet to avoid a recurring research project (see Figure 1). Then, using only the information from Screen 1, ask: DO THE REQUESTED AMOUNT AND USE OF PROCEEDS ALIGN WITH THE ASSET’S STATUS? A request for

construction financing on a “stabilized” property, or a bridge loan implying better performance than described, indicates a mismatch worth flagging.

your firm’s minimum cushion for extensions or execution delays. A sixmonth standard exists because a plan that uses up its entire cushion leaves no room for ordinary closing friction. If your cushion varies by asset type or complexity, apply that variation. DOES THE PROPOSED LOAN STRUCTURE FIT THE STATED BUSINESS PLAN? For instance, a short-term bridge loan for a plan requiring a long construction or lease-up period should be flagged. DOES THE PROPOSED EXIT LOGICALLY FOLLOW FROM THE TERM AND CURRENT ASSET STATUS? If a refinance exit is described but the property’s income picture is far from what a permanent lender would require today, that discrepancy must be noted. No need for a comp set to see it.

SCREEN 3: DO THE ECONOMICS PASS A STRAIGHT-FACE TEST? (3 MINUTES) This is where triage frameworks often accidentally morph into full underwriting. Keep your focus on the existing income picture and numbers you know intimately for your own lending criteria. Avoid pulling comps or stressing rent growth against a market study; that’s for full underwriting. And if honestly answering any of these questions requires a live comp set or a market call you haven’t made, stop. That’s your signal the file warrants full underwriting, not a reason to build the comp set now.

identify an obvious problem. This is not the final underwriting calculation, and treating it as such is a mistake in itself. DOES THE REQUESTED AMOUNT FALL WITHIN THE LEVERAGE RANGE?

Review this in the context of asset type and purchase price or value, adhering to your firm’s standards. IS THE EXPENSE PICTURE INTERNALLY PLAUSIBLE? Missing property taxes,

insurance, management, or other obvious operating expenses can reveal an unrealistic NOI before any market benchmarking is needed. DO THE PROJECTED RENTS AND TIMELINE ALIGN WITH WHAT THE FILE ITSELF SUPPORTS? If the numbers only work

with rent growth beyond what trailing performance in the file indicates, or a stabilization timeline faster than the asset’s own leasing history, consider the assumption aggressive. If the projection tracks what the file already shows, it’s reasonable to test further downstream.

SCREEN 4: DOES THE SPONSOR STABILIZE THE DEAL OR COMPLICATE IT? (3 MINUTES) The goal isn’t to prove sponsor strength, but to avoid advancing deals where sponsor risk is already evident in the file. A marginal deal with a capable, well-capitalized and experienced sponsor might still deserve a closer look. A fragile deal with a fragile sponsor almost never does. DOES THE BACKGROUND CHECK REVEAL

DOES THE STATED NET OPERATING

AN IMMEDIATE DISQUALIFIER? Look

DOES THE LOAN TERM PROVIDE

INCOME CLEAR YOUR PRELIMINARY

SUFFICIENT RUNWAY? Compare the sponsor’s described stabilization, lease-up, or construction timeline against the requested term, adding

DEBT-SERVICE THRESHOLD? Use a

for a recent foreclosure or deed-in-lieu on a similar asset class, active litigation with lenders, a pattern of incomplete projects, or an entity structure suggesting the borrower isn’t the actual operator.

PRIVATE LENDER BY AAPL

placeholder rate and amortization your firm typically quotes early in the process; a rough debt yield or DSCR is enough to

FIGURE 1. SAMPLE REFERENCE SHEET: UNDERWRITING PARAMETERS BY ASSET CLASS Create a one-page reference sheet to transform triage from a live calculation into a simple lookup. The bands below are illustrative and drawn from generalized product parameters. Replace figures with your shop’s numbers and apply consistently to every file. ASSET

STRUCTURE

LEVERAGE AND RATIO

CUSHION

TIMELINE TO CLOSE

Bridge

12 to 24 months, interest-only,

Up to 80% LTV purchase.

Minimum 6 months beyond

3 to 4 weeks after economics

projected stabilization

and sponsor clear

bridge to refinance or sale

Up to 75% LTV refinance 1.0x preferred

Rehab or

6 to 24 months, interest-only

Fix-and-Flip

Ground Up

Up to 75% ARV 6 to 24 months, interest-only

Construction

DSCR/LTR

Up to 90% LTC

Up to 85% LTC Up to 65% ARV

30-year amortizing

Up to 80% LTV purchase

timeline Minimum 3 to 6 months

21 days after file is complete

beyond contractor-quoted renovation timeline Minimum 6 to 9 months

21 days after file is complete

beyond permitted construction schedule N/A

21 days

Up to 75% LTV refinance 1.1x preferred

Note. The leverage bands and DSCR ratio shown represent the “preferred tier” a program is typically built around. Many programs also include a wider secondary band with compensating factors. Use the tier that reflects your shop’s actual triage standard, not your maximum exception.

DOES THE SPONSOR’S ACTUAL TRACK RECORD SUIT THIS DEAL? Their actual

history, not their pitch, should align with this asset type, geography, and execution strategy. Check the bio or sponsor package for specific prior deals in this lane, not general confidence in the plan. DOES THE SPONSOR DEMONSTRATE

Association reported 17% of commercial and multifamily mortgage balances— roughly $875 billion—maturing in 2026. This pressure is already in your pipeline: borrowers who assumed a clean refi exit two years ago are now testing whether your term can carry them through a more challenging takeout.

SUFFICIENT LIQUIDITY FOR THE PLAN?

FOR A REFINANCE EXIT, DOES THE AS-

Review the schedule of real estate owned or personal financial statement already provided. At triage, you’re looking for obvious thin capitalization, not establishing a final reserve requirement.

STABILIZED NOI CLEAR A STANDARD

SCREEN 5: IS THE EXIT CREDIBLE, OR JUST DESCRIBED? (4 MINUTES) “Refinance” and “sale” are labels, not analysis. The Mortgage Bankers

PERMANENT-DEBT DSCR FLOOR?

This should account for the debt type and use a placeholder or averaged rate rather than today’s exact pricing. This serves to flag obvious problems, not to provide a final takeout quote. FOR A SALE EXIT, DOES THE ASSET HAVE AN IDENTIFIABLE MARKET? This means you

can already point to buyer activity for this asset type, rather than a hoped-for buyer

who hasn’t materialized. If you can’t answer that from your existing market knowledge, that uncertainty is the finding. Verifying an actual buyer pool is then underwriting’s job. FOR A CONSTRUCTION DEAL, DO YOU ALREADY HAVE REPLACEMENT COST OR AS-COMPLETED BENCHMARKS FOR THIS MARKET? If the request doesn’t pencil

against them, that’s a structural issue. If you’d need to build that analysis from scratch, this question doesn’t belong at triage for your firm, and the deal should move to underwriting for an answer. HOW MANY THINGS MUST BREAK IN THE BORROWER’S FAVOR FOR THE EXIT TO WORK? The more elements that must

go exactly to plan—rate relief, cap rate compression, absorption, and lender appetite—the less credible the exit becomes. Each of those might be a manageable FALL 2026

Operations

FIGURE 2. SAMPLE DECLINED FILE LABELS Where It Failed

» INTAKE / FILE » ASSET » STRUCTURE » ECONOMICS » SPONSOR » LEVERAGE » EXIT » TIMELINE Why It Failed

» INCOMPLETE INFORMATION » ASSET / STRUCTURE MISMATCH

» TERM OR TIMELINE » LEVERAGE OUTSIDE GUIDELINES

» ECONOMICS DON’T WORK » SPONSOR MISMATCH » SPONSOR FINANCIAL CAPACITY

» BACKGROUND / TRACK RECORD

» EXIT UNSUPPORTED » MARKET / LIQUIDITY CONCERN

» TOO MANY ASSUMPTIONS » OUTSIDE LENDING PARAMETERS

PRIVATE LENDER BY AAPL

The most expensive underwriting mistake may be spending two weeks proving what fifteen minutes could have told you.” assumption on its own, but stacked together, they can turn a plan into mere hope.

economic problems before you even build a model? Discovering those patterns are more valuable than any single deal you decline.

INCOMPLETE FILE OR WEAK DEAL?

Fifteen minutes won’t tell you everything about a file, but it will tell you whether the file deserves the two weeks it takes to find out.

Some files aren’t ready; others aren’t viable. These are distinct problems. An incomplete file might still deserve another look if the story is coherent, the economics are directionally plausible, and the missing pieces are likely to be resolved. Thin documentation and missing third-party reports are packaging issues that can be fixed. A weak deal is different. Its economics don’t hold up under a plain reading, the exit is speculative, the sponsor isn’t suited to the plan’s complexity, or the structure requires too many things to go right. More documentation won’t fix any of that. Treat every incomplete file like a bad deal, and you’ll miss real opportunities. Treat a weak deal as if it’s merely incomplete, and you’ll burn underwriting capacity on files that were never going to close. Run this screen consistently. For each file, write down your decline reason in terms of where it failed triage and why, and review these patterns quarterly (see Figure 2). Which sources send the most out-of-box submissions? Which markets consistently fail on exit? Which asset types show

MICHAEL BARNETT

Michael Barnett is a seasoned entrepreneur, investor, and FinTech leader with over 20 years of experience in consumer and commercial lending. He has held senior roles at PHH Corporation and OnDeck Capital, building deep expertise across the lending landscape. As founder and CEO of Loanspark, Barnett focuses on expanding access to capital through innovative financial solutions. Barnett is committed to supporting underserved and emerging businesses, with a track record of driving initiatives that strengthen local economies and advance financial inclusion.

MORE THAN LENDERS. PARTNERS. $2B+

FUNDED LOANS

1,000+

LOANS FUNDED

300+

ACTIVE PROJECTS

LENDING@CCGLOANS.COM | (617) 271-2326 | CCGLOANS.COM

Better Operations for Private Credit Lenders. See how we decreased servicing costs for ProducePay by 25%. Read the case at BedrockServicing.com

FALL 2026

Operations

Know the 4 C’s of Contractor Evaluation Take a closer look at who will execute the work to identify weak assumptions before they become delays, cost overruns, or problems with the exit.

RON MARSZALEK, GENSTONE CONSTRUCTION

renovation budget and construction schedule are only as reliable as the contractor’s ability to deliver. After more than 20 years in construction and renovation, I’ve learned that poorly defined scopes, unrealistic schedules, missed items, and untested assumptions often pose greater threats than modest fluctuations in material costs. Poor execution can lead to higher carrying costs, delayed exits, and pressure on the borrower’s projected return. Contractor evaluation operates on a different set of C’s: capability, capacity, completeness, and credibility. Capability assesses whether the contractor has the experience, resources, and capacity to execute the project. Capacity tells you whether the contractor is overextended. Completeness examines whether the proposal adequately reflects the work being financed. Credibility synthesizes these elements: Do the contractor, price, schedule, and execution plan make sense for the project and market?

CAPABILITY Can this contractor execute this type of project? Evaluating capability begins with understanding what visibility the 86

PRIVATE LENDER BY AAPL

underwriting process provides into the contractor. Licensing, insurance, and bonding establish whether the contractor is properly authorized and protected to perform the work, while also identifying gaps that could create regulatory, liability, or project risk. Business history, contractor resumes, and comparable project portfolios provide a more direct view of whether the contractor has successfully managed work of similar scope and complexity. Relevant experience matters more than longevity alone. A contractor with 15 years of experience in kitchens and bathrooms, for example, may have limited experience managing a whole-house rehabilitation involving structural repairs, multiple trades, permits, and inspections. The objective is to determine whether the contractor’s documented experience and current qualifications align with the demands of the project being financed.

CAPACITY Can the contractor execute this project now, given existing commitments and available resources?

Contractors rarely turn away work, so you should look for evidence that proposed start and completion dates are supported by an actual plan. Who will manage the job? What crews and subcontractors are available? How does this project fit with other commitments? An overextended contractor may appear active while devoting limited resources to a property. For example, the contractor may briefly visit the job, provide progress photos, and then move on to other projects, creating the appearance of sustained activity without meaningful progress. A defined schedule and reasonable payment structure can help create accountability.

COMPLETENESS Does the proposal account for the work being financed? A thorough proposal gives you a stronger basis for determining whether the renovation budget supports the work being financed. Successful projects operate in black and white, not gray. A well-developed bid connects price to a defined scope, identifying quantities, locations, materials, and specifications where appropriate, while addressing assumptions and potential gaps that could lead to additional work or costs later. When multiple proposals are available, the most detailed can serve as a starting point for comparison. Rather than ranking them by total cost, compare them line by line to identify differences in materials, repairs, allowances, and omitted work. Even a bid the borrower doesn’t intend to select may identify an item missing from the preferred contractor’s proposal. Consider a hypothetical whole-house renovation. Contractor A proposes $52,000, with broad line items, “builder

grade” materials, electrical and plumbing allowances, unspecified permit responsibility, and a 6-week completion estimate. Contractor B proposes $68,000, with quantities and material specifications, defined mechanical work, assigned permit responsibility, and an 8-week schedule tied to milestones. I would be more comfortable using Contractor B’s number as an underwriting assumption—not because the higher bid is inherently better, but because it provides greater visibility into what is being priced. Contractor A may ultimately offer better value, but first, the $52,000 proposal needs to be reconciled against the more detailed scope. The $16,000 difference may shrink considerably once differences in materials, allowances, and omitted items are accounted for.

CREDIBILITY Do the contractor, budget, schedule and execution plan make sense together? Consider whether the plan is reasonable for the property and local market. Historical costs from comparable projects can provide one benchmark, while construction estimating software and cost-averaging tools can help identify numbers that appear substantially outside expected ranges. These resources don’t replace local expertise but can indicate when something warrants another look. Major systems deserve particular attention because they have the greatest potential to change the economics of a renovation. Roof, HVAC, plumbing, electrical, foundation, and structural conditions should be understood before cosmetic choices dominate the discussion. These are potential “make or break” items due to the costs they can introduce if not properly accounted for. FALL 2026

Operations

The timeline should also tell a convincing story. Permitting is one of the largest variables because requirements, inspections, and turnaround times vary among municipalities. Understanding local conditions is crucial before accepting an aggressive completion date. Material procurement is another source of delay, particularly when contractors wait until products are needed to order doors, windows, or other items with multiweek lead times.

NEXT STEP: THE WORKFLOW How you incorporate these considerations will vary based on loan volume, project complexity, resources, risk tolerance, and

operating model. The goal is to incorporate relevant contractor information into established controls without creating a separate construction underwriting function. Projects that finish on time and on budget aren’t necessarily those that encounter the fewest surprises; they’re the ones where risks were better understood before work began and there was a structure for addressing them. Contractor evaluation can provide another way to develop that understanding. The contractor, scope, pricing, and schedule behind a renovation budget should collectively tell a credible story about how the borrower plans to get from acquisition to exit. The more you can test that story before the draw, the better.

RON MARSZALEK

Ron Marszalek is chief operating officer of Genstone Construction, where he leads a nationwide team managing investorfocused renovation projects, primarily involving single-family properties. With more than 20 years in construction, Marszalek brings expertise in project estimating, management, and operations. His hands-on knowledge has helped drive renovation projects across the country.

Partner with Servion for: - End-to-end commercial loan underwriting and servicing - In-depth credit analysis and risk assessment - Portfolio management and ongoing support - Scalable solutions for both new and experienced commercial lenders - Delivering stronger, smarter commercial lending—without adding internal overhead.

PRIVATE LENDER BY AAPL

Connect with Us (612) 270-9091 myservion.com/CLR

Every core function in a single system of record

See the platform in action FALL 2026

Operations

Don’t Make Borrowers Guess Five areas of transparency can help lenders close the gap between what borrowers sign and what they actually understand.

MAYA KRAUT, PIMLICO CAPITAL

work at a direct private lender, where roughly half of our pipeline is filled by repeat clients, some of whom came to us after having a difficult experience with another lender. Regardless of how they come to us, they want the same thing: to know exactly what they are paying, what the process will look like, and what happens when a deal changes. Harvard Business School’s Ryan Buell coined the term “operational transparency” to describe the deliberate design of business operations to allow customers to see the work being done on their behalf. The decisions that matter most to the borrower often happen behind closed doors, so embracing borrowers’ desire to understand why and how decisions are made—or, in direct terms, embracing borrower due diligence—is key. There is a practical and legal reason to make your operation more transparent, too. As more states adopt more regulation and financing disclosure requirements for private lending businesses, lenders are facing a patchwork of rules that can create additional hurdles in the markets where they operate. The more clearly you explain your pricing,

PRIVATE LENDER BY AAPL

process, and expectations on your own terms, the less you leave to be clarified later, whether by a borrower or by a new disclosure requirement. I’ve landed on five points you should ensure every borrower understands clearly before they sign a term sheet, and regardless of whether they think to ask the question.

QUESTION 1: ARE YOU A LENDER OR A BROKER? Most borrowers can’t tell you whether they are working with a direct lender or a broker. There is nothing wrong with a broker model; there is something wrong with obscuring your business model. Brokers, in some cases, are a better choice depending on the borrower’s needs. A borrower chooses you based on how you sold them on your product. If the final say on rate, terms, and timeline is not in your control, tell them. Recently, we had a situation where a broker promised a set of terms to their borrower—and also told them they were the direct lender. When the appraisal came in lower, our terms changed, which was expected. Not expected was the broker

having to explain why the terms they promised no longer held. The broker ultimately lost both the deal and the customer because the borrower felt misled. If you broker some or all of your pipeline, disclose it and explain the advantages of that model: You help ensure the borrower gets the best deal available without having to personally shop multiple lenders, you package the file to ensure smooth and speedy underwriting, and you handle the details so the borrower can focus on all the other moving parts of the deal. Yes, some borrowers will self-select out—but many more will value your business model, and they won’t hold you responsible for what’s out of your control.

QUESTION 2: HOW DOES YOUR FUNDING PROCESS ACTUALLY WORK? Acquisition funding is pretty simple; it happens at the closing table. Construction deals are different; a borrower who doesn’t understand your draw process can put the whole project at risk. A new flipper who doesn’t understand reimbursement-based funding might burn through liquidity, stall the project, and blame you for a process they assumed worked differently. Should borrowers know to ask questions about how they’re going to get the loan proceeds? Yes. But even experienced borrowers may assume the draw process works the same with every lender, or

even the same as a deal they did with you before (not realizing the structure of this one requires something different). If borrowers don’t ask up front, regardless of whether they’re new to the industry or on their sixth project with you, be sure to answer these (even unasked) questions:

» HOW LONG DOES IT TAKE FOR THE

FUNDS TO HIT MY ACCOUNT FROM WHEN I MAKE THE DRAW REQUEST?

» DO YOU USE A THIRD-PARTY OR IN-HOUSE INSPECTOR?

» IS THERE A PER-DRAW FEE? What alternative disbursement options exist (e.g., full advance at closing, escrow holdback, or line of credit)?

We just had a borrower who, on a project with another lender, wasn’t aware that they would receive draw funds afterthe construction work associated with that draw was completed. They didn’t know to maintain enough liquidity to pay their contractor and expected the lender to pay upfront, leading to a furious borrower and a very unhappy contractor. Were the disbursement terms in their loan contract? Likely, yes. Did both the borrower and lender assume the borrower understood how it worked? Also likely, yes. Did the borrower actually understand the process? Clearly—no. A borrower who understands the loan mechanics and their options, FALL 2026

Operations

at any experience level, manages their contractor and cash better.

QUESTION 3: WHAT DOES THIS LOAN COST, THE TOTAL COST? Rate is the number borrowers shop for but can be one of the least informative numbers in the deal. Ten percent on a 4-month, $250,000 bridge loan is roughly $8,333 in interest, which is real money, but relatively predictable money. What surprises borrowers, and what fuels the industry’s worst reviews, are the elements stacked on top of the rate: origination points, draw fees, legal fees, extension fees when the project runs long, and prepayment penalties. Borrowers cannot evaluate pricing they cannot see. The gaps usually aren’t intentional since private lenders and borrowers alike prioritize closing fast and getting hard deals done. But when you take the time to clearly explain every cost and variable, borrowers can decide faster and with more confidence on product fit. That builds the kind of trust that brings them back, and trust marketing you don’t have to pay for.

QUESTION 4: WHAT ARE YOUR BORROWER QUALIFICATION REQUIREMENTS? Every lender has different borrower qualification requirements when it comes to credit scores, credit history, and background checks. Some don’t care about credit score or history; for others, it will vary wildly how much impact it has on terms. Similarly, criminal records aren’t always as disqualifying as they would be to a traditional bank. Tell your borrower up front what matters, how much, and why. Borrowers often assume something is more damaging than it is or stay quiet hoping it doesn’t 92

PRIVATE LENDER BY AAPL

come up—rather than risk hurting their chances by disclosing up front. We learned this lesson from a borrower who decided to tell us up front about a serious criminal offense many years earlier. Other lenders had found it during loan processing and backed out, and we likely would have too if he’d waited. Instead, his openness gave us room to ask questions. We learned he’d turned his life around and now helps young people break the cycle of crime he’d once been caught in. That gave us time to make the case to our investors for an exception. The deal was approved, and we’ve since done dozens more with him. So now, we tell borrowers up front what we look at and how much it weighs—which encourages them to give us the information to get the deal done before we have no room for exceptions (or feel misled ourselves). In a similar situation, we had a borrower come to us from another lender. Two days before closing, the previous lender’s final file review flagged an issue—an issue that had been present for much, much longer than 2 days. While mistakes and oversights can happen to any lender, the borrower was rattled by the black box situation itself and didn’t trust that the lender wasn’t just trying to squeeze more money out of the deal at the last minute. In similar situations, we’ve found that communicating where the deal stands at every point makes it easier to recover from the mistakes that willhappen. Borrowers who’ve seen the process believe a mistake is just a mistake, and they accept unplanned changes more readily.

QUESTION 5: WHO DO I CALL WHEN SOMETHING GOES WRONG? Most loan transactions will have a moment that requires a fast answer from someone with actual decision-making

authority. Make sure your borrowers know what goes through the automated system, what needs direct contact, and how to navigate communication lines. If your shop gives borrowers a named contact, make that part of your pitch, and be explicit about when that person should be contacted, what they can resolve, and what happens if the issue needs to move to someone else. This not only limits borrower frustration but helps keep the file moving—a frustrated borrower is one who gives up on trying to get you a key piece of information. Transparency about the contact process can become a competitive advantage without requiring you to redesign the way your team operates. A few years back, a New York investor decided to break into our Mid-Atlantic market. In a remarkably short time, he assembled an impressive portfolio that we financed on the whole. He was the kind of client every private lender loves: sharp, responsible, and never late on payments. Then 1 month, all of his mortgage payments with us bounced at once. We reached out with no response, through every channel imaginable, so we began the foreclosure process. However, what didn’t sit right with us was that this wasn’t a borrower who overleveraged into bad properties. His holdings were in prime locations with substantial equity, and walking away without a word made no financial sense for anyone involved. As the foreclosure moved forward, one of our team members came across a news article that said our borrower had just been sentenced to 18 months in prison. We decided to pause the foreclosure process while we gathered more information and secured the properties, then waited 18 months until he called saying he wanted to meet. He sat down already certain of what

he’d come to hear, that we’d long since sold everything. When we told him the properties were all still in his name, he was stunned. The point was not that foreclosure would have been improper; we had a legitimate interest to protect after payments stopped. The decision to pause gave us time to understand what had happened and determine whether there was a way to preserve the borrower’s position while protecting our interest in the properties. I tell that story because it’s the same principle we run the whole operation on, just tested at an extreme. Most of the time operational transparency is unglamorous: pre-vetting yourself with the borrower instead of waiting for them to ask, explaining

the costs on the term sheet, making sure a borrower knows who to reach throughout the transaction. It rarely looks like halting a justified foreclosure. But the principle is the same: A borrower should be able to feel like you are on their team. None of this is easy, and I won’t pretend it is. But what it saves you in the long run is stalled projects, bad reviews, and upset borrowers who misunderstood what we consider to be straightforward because we live it every day. What you get back is what every lender wants: borrowers who understand the product, run their projects accordingly, and come back because the last deal went smoothly. When borrowers understand your process and know what you

need from them, you get cleaner files, faster decisions, and fewer surprises.

MAYA KRAUT

Maya Kraut is a real estate analyst at Pimlico Capital, a private lender that has financed more than 3,500 fix-and-flip and rental loans since 2016. She believes private lending is built on genuine relationships.

FALL 2026

Operations

The Contract You Didn’t Sign Sets the Risk Your borrower may be a party to a construction contract, but its terms affect your collateral, draw exposure, project timeline, and ability to step in when something goes wrong.

DAVID JACOBS, CONSTRUCTION INSPECTION SPECIALISTS

he contract is the foundational document for the construction project. A strong agreement fairly balances risk among the parties and addresses the outcomes and scenarios a project is likely to encounter. A weak contract can assign risk unevenly, leave significant gray areas open to dispute, or be written primarily for the contractor’s benefit. You may not be a party to the agreement, but its terms can affect the loan. The borrower is responsible for the contract, while your funds remain exposed to what that contract permits. That makes the agreement part of the underwriting analysis alongside the borrower’s history, the general contractor’s qualifications, and the profitability of the loan. Your leverage is front-loaded. Before closing, revisions can be made a condition of funding, and a borrower who wants the loan has an incentive to advocate for changes with the contractor. After closing, asking a contractor with a signed agreement to surrender protections voluntarily is a much harder proposition. Anything you need in the document, whether an assignment clause, a bonding requirement, or a cap on escalation, should be addressed as a condition of loan

PRIVATE LENDER BY AAPL

approval and confirmed by amendment before the first disbursement.

focus primarily on the additions and deletions to the standard language.

After closing, the protection shifts to loan administration. Inspections tied to each draw, lien waivers collected as a condition of payment, and disciplined review of every change order can help identify a deteriorating project while sufficient funds remain in the budget.

WITH A CUSTOM CONTRACT, you will need

You can never eliminate your exposure to contractual risk entirely, but keeping the following considerations front of mind can help limit that risk substantially.

IS IT STANDARD OR CUSTOM? The first item to review when evaluating a new construction contract is the overall structure and format of the agreement. Just as each construction project has unique features, each contract will contain distinct elements that may or may not be to your benefit. A contract will typically follow an industry-standard format or be a custom agreement developed by the general contractor. FOR STANDARDIZED CONTRACTS, such as those published by the American Institute of Architects or ConsensusDocs, your review can be streamlined and

to read much more closely, as the scope of included clauses and nonstandard language can vary significantly. Evaluate the structure of the contract against the scope of the project. A short, custom contract that uses blanket language and catch-all phrasing might be appropriate for a small renovation but would likely not offer sufficient protection on a large commercial project. Many residential homebuilders use a custom contract, and because these builders may be less experienced than a large commercial contractor, a close review of the entire document is warranted. Regardless of size or scope, the format of the contract is a good early indication of the sophistication and documentation you can expect from the contractor as the project progresses.

IS IT COMPLETE? When reviewing the documents in the package for a proposed loan, it’s important to verify that what is presented as the contract is actually a contract. It is unfortunately common to see submissions where a proposal is submitted in place of a contract.

While proposals generally outline costs and payment terms, they typically do not include full contractual clauses such as insurance requirements, dispute resolution, or assignment of specific responsibilities. CONFIRM THE AGREEMENT IS FULLY EXECUTED. The contract submitted for consideration should be signed by both the general contractor and owner before closing. Without confirmed execution, an unsigned contract in a loan package is little more than a suggestion and offers no protection or assurances for you. COLLECT THE COMPLETE CONTRACT PACKAGE. A completed contract will typically

include the body of the agreement, exhibits, attachments, and any executed amendments or change orders. These auxiliary documents often contain information essential to your evaluation, such as a scope of work or specifications exhibit. It’s common for contracts to “reference Exhibit X” for payment or other terms, so confirming that those exhibits were actually submitted is an essential part of any review for completeness. ACCOUNT FOR THE FULL SCOPE OF WORK.

The general contractor will typically include a list of exclusions, either within the body of the contract or in the scope of work exhibit, covering items the owner is expected to complete outside of the primary construction contract. You will need to price that excluded work to determine whether the owner holds sufficient funds to complete the project or whether those costs need to be included in the loan amount as well. An extensive list of exclusions can also affect project performance, as multiple additional subcontractors may need to be coordinated by the owner.

DOES IT PROTECT YOU ENOUGH? A good contract is thorough and leaves no gray areas open to interpretation. This can FALL 2026

Operations

be said for any contract, but a construction agreement calls for several specific inclusions.

DOES IT PROTECT THE CONTRACTOR TOO MUCH?

largely as the contract allowed, and the lender absorbed the resulting exposure.

PAYMENT TERMS SHOULD ESTABLISH A

Just as certain provisions strengthen your position, others erode it.

CAN YOU MANAGE THE RISK?

VERIFIABLE BASIS FOR EACH DRAW. They

should be tied to a schedule of values detailed enough to be verified in the field, with retainage and the conditions for its release clearly stated. A firm date for substantial completion, supported by liquidated damages, gives the agreement teeth that a projected completion window does not. THE CHANGE ORDER PROCESS SHOULD REQUIRE WRITTEN APPROVAL BEFORE WORK PROCEEDS. This protects you from funding costs that were never reviewed. INSURANCE REQUIREMENTS SHOULD CLEARLY DEFINE THE CONTRACTOR’S COVERAGE OBLIGATIONS. They should

be specific as to coverage types and limits, and on large or complex projects, payment and performance bonds are generally worth the premium. A LIEN WAIVER REQUIREMENT SHOULD TIE PAYMENT APPLICATIONS TO EVIDENCE THAT PRIOR WORK HAS BEEN PAID. It obligates the general contractor and its subcontractors to provide waivers with each payment application. Without it, you have no reliable way to confirm that the funds you disbursed last month reached the parties who earned them. AN ASSIGNMENT PROVISION SHOULD PRESERVE YOUR ABILITY TO STEP INTO THE CONTRACT AFTER A BORROWER DEFAULT. It allows the contract to be assigned

to you, or to a party you designate, if the borrower defaults. A contract that cannot be assigned leaves you holding a partially completed building and a contractor with no obligation to continue. Language requiring the contractor to notify you of the owner’s default serves a similar purpose, giving you an opportunity to cure before work stops. 96

PRIVATE LENDER BY AAPL

The schedule of values can shift too much risk to the lender before the work is complete. Mobilization, general conditions, and supervision are legitimate line items, but weighted toward the first few draws, they can leave you 60% disbursed against a project that is 40% built. Material escalation clauses have also become routine, and an openended clause with no cap and no obligation to document the increase transfers the full risk of market movement onto the loan. Other provisions can give the contractor flexibility without imposing a corresponding obligation. Watch for “estimated” completion dates, termination for convenience provisions that entitle the contractor to overhead and profit on work never performed, limitations of liability capped at the contractor’s fee, and broad allowances that leave meaningful portions of the scope unverified by bids. None of these terms is necessarily disqualifying on its own. Taken together, they can create an agreement in which the contractor carries relatively little risk while the owner, and by extension you, carries much of it. Consider the cumulative effect. A midsized, mixed-use project financed on a 12-page custom contract included a heavily front-loaded schedule of values, an uncapped escalation clause, a completion date identified as an estimate, and an eight-item exclusion list that had not been budgeted by the borrower. All of those terms were visible during underwriting. By the eighth month, the borrower had drawn well past the value of the work in place, while the owner-furnished exclusions had consumed the remaining contingency. The project was never dramatically mismanaged. It performed

None of this requires you to become a construction attorney. It requires a consistent review process that asks the same questions of every loan. Is the contract complete and executed, does it cover the full scope of work, are the payment and completion terms enforceable, and can you step into the agreement if your borrower cannot perform? A contract that answers those questions is no guarantee of a successful project, but it tells you a great deal about how that project is likely to be run. This article is intended for general informational purposes only and should not be construed as legal advice or as a substitute for the advice of qualified counsel. Construction contract terms and their enforceability vary by jurisdiction. Lenders should consult their own attorneys regarding any specific contract or transaction.

DAVID JACOBS

David Jacobs is the director of operations for Construction Inspection Specialists. Jacobs has over 10 years of construction industry experience encompassing on-site construction labor, operations, and site management. Jacobs is certified with the Association of Construction Inspectors and holds a CDT certification from CSI.

Experienced legal representation for private lenders GET YOUR PARTNER IN LENDING WWW.HDRBB.COM/PLG

50,000+ LOANS CLOSED

Round-The-Clock Accessibility

$7.5B+

100+

IN LOANS CLOSED

Multi-State Practice

PRIVATE LENDERS SERVED

Dedicated Specialists

Hartmann Doherty Rosa Berman & Bulbulia LLP

Connect with our Private Lending Group

www.hdrbb.com

FALL 2026

Marketing

Your Advantage Is the Standard Your next differentiator will come from understanding what customers value before the market catches up.

ERICA LACENTRA, RCN CAPITAL

ou may find that the competitive advantages that once drove growth— whether pricing, products, or process—are no longer enough. What was once a differentiator has become standard, as borrowers now expect the same level of speed, flexibility, and service across the board.

THE “FRESH” TEST

The better question is not “What makes us different?” but “What are we doing today that competitors won’t be able to say about themselves 18 months from now?”

If you have a great rapport with certain clients, ask them which other companies are winning their business and why. Inquire about what competitors do better and where your company can improve. These conversations are not just about discovering what clients like; they should also reveal how customer needs are changing.

In private lending, where pricing, products, technology, and speed can be replicated quickly, the answer requires a closer look at what borrowers actually value, where expectations are moving and what your organization can consistently deliver. 98

PRIVATE LENDER BY AAPL

One of the easiest ways to check what’s still meaningful and what’s become standard is by asking clients for their feedback. Salespeople should check in with customers and ask, “Why did you pick our company over other options?”

Client needs will naturally change over time, making feedback critical for

diagnosing priorities and identifying opportunities to improve your business and product offerings—opportunities you can then leverage as competitive advantages. If multiple clients tell you that speed no longer influences their decision because every lender can close quickly, that’s a signal. If clients increasingly mention pricing, transparency, ease of execution, or responsiveness, those shifts deserve attention.

SEPARATE SIGNAL FROM NOISE Once you understand what your clients value and how those priorities are changing, the next challenge is determining where to focus. Not every individual

request necessitates developing a new product or process. It’s important to take the gathered feedback and ask a few questions before deciding how, or if, to incorporate it into your business. First: “Does it matter to the client?” While the feedback came from customers, consider whether it’s a singular issue or a consistent, clear need within the industry. Next: “Does it matter to the business?” Will a solution based on this feedback improve customer retention? Will it increase profitability? Finally: “Can we execute it?” Will your company be able to deliver a solution that clients perceive as a true advantage, or will it end up as marketing fluff without real substance? Recognizing what you can do—and more importantly, do well—can mean the difference between creating a real competitive advantage and just another trumped-up claim. These questions help separate shortterm reactions from long-term strategy. In some cases, the right investment may be a new product. In others, it might be improving execution of something you

already do well. Sometimes the smartest decision is recognizing that clients don’t value a particular feature as much as internal stakeholders assume. Once you know what your clients value and where to focus, the next challenge is ensuring your organization can actually deliver.

MAKE CHANGE THE STANDARD You will not be able to protect a business feature forever, so you need to build an organization capable of continuous evolution and introducing new advantages before the old ones lose impact. Start with a focus on organizational agility. Whether developing a new product, changing a policy to better align with client needs, or adopting new technology, agility means having the right mentality to move quickly and with confidence. The hardest part is moving first; many lenders watch competitors to see what they’re doing and then react to that under the assumption there is safety and less risk in numbers. But you can’t build a competitive advantage being second to market.

Then there is the importance of consistency. Clients do not judge a lender based on their best interaction; they judge based on the predictability of every interaction. Products can be copied, technology can be built or purchased, and pricing gaps can close almost overnight. While many lenders appear similar on paper, consistency builds long-term trust and loyalty with your customer base. Finally, establish a company culture where innovation is everyone’s responsibility. Sustainable competitive advantages don’t originate solely in the C-suite. They come from companies that encourage employees at every level to identify challenges, share ideas, and question existing processes. Clientfacing employees often have the clearest perspective on where improvements can be made—and that includes not just loan officers and account executives. Processors, underwriters, and servicing teams may see changing client expectations long before those trends surface in company data. Companies that actively listen to those insights, and more importantly, empower FALL 2026

Marketing

their teams to act, are in a far better position to adapt to changing market demands. Many of the attributes lenders once used to distinguish themselves are now baseline expectations. Borrowers can find multiple lenders offering competitive pricing, fast closings, flexible structures, and sophisticated technology. Your next competitive advantage may ultimately come from a new product, a better process, a different approach to communication or something the market has not yet identified as a priority.

START HERE IMPLEMENT CUSTOMER FEEDBACK LOOP

» Bi-annual or quarterly feedback survey

» Post-closing

transaction survey

» Example: 100% flip financing

» Monthly calls based on

potential customer churn

END OPPORTUNITY ASSESSMENT

The question is whether you will recognize it while it is still a differentiator, or after everyone else has caught up.

ERICA LACENTRA

IDENTIFY OPPORTUNITY

COMPETITIVE ADVANTAGE PROCESS MAP

Erica LaCentra, chief marketing officer at RCN Capital, is responsible for

END PILOT

planning and implementing the company marketing plan and overseeing its marketing department. LaCentra led a strategic rebrand to position RCN Capital for expansion, rapidly expanding its customer base and elevating it to a national brand. LaCentra serves on the American Association of Private Lenders’ (AAPL) Education Advisory Committee, is the Marketing & Communications Chair for AREAA Boston, and is a member of the REI INK Editorial Board. LaCentra holds a B.S. in Advertising with a minor in Fine Arts from Suffolk University.

100

PRIVATE LENDER BY AAPL

CONTINUOUS REVIEW AND IMPROVEMENT

KPI MONITORING

» Volume growth » Pull-through rate » Profitability

ANALYZE THE MARKETPLACE How does it compare on:

DOES THIS ALIGN WITH BUSINESS STRATEGY?

» Product Features » Pricing » Execution » Customer demand

DOES THIS ALIGN WITH BUSINESS STRATEGY?

MONITOR COMPETITOR ACTIVITY

IS THERE POSITIVE IMPACT TO REVENUE, COSTS, OR RISK?

MONITOR COMPETITOR ACTIVITY

DO RESULTS MATCH OBJECTIVES AND PROJECTIONS?

IS THERE POSITIVE IMPACT TO REVENUE, COSTS, OR RISK?

DESIGN SOLUTION

EVALUATE AND ADJUST

» Features » Process » Communication to

affected departments

FULL ROLLOUT

DO RESULTS MATCH OBJECTIVES AND PROJECTIONS?

ROLLOUT PILOT PROGRAM/PROCESS

FALL 2026

101

Conference Preview

AAPL was established in 2009 at Caesars Palace Las Vegas, when a small caucus of industry leaders gathered around a shared conviction: Private lending would not flourish without education, ethical standards, advocacy, and a professional community willing to build them. Sixteen years later, the address is the same, but the gathering doesn’t fit in a meeting room. Today, #AAPLANNUAL brings more than 1,000 lending professionals to Caesars Palace, where executives, operators, service providers, and industry leaders come to take the pulse of the market, build relationships, and make the deals and decisions that shape the year ahead.

102

PRIVATE LENDER BY AAPL

THE CONFERENCE EXPERIENCE Year after year, our conference is touted as the industry standard for collaboration, must-attend sessions, and acclaimed networking activities.

SESSIONS From main-stage presentations to three concurrent education tracks, #AAPLANNUAL packs more than 15 sessions into two days of market intelligence, operational strategy, and industry perspective. More than 50 experts take the stage, with sessions recorded so attendees can revisit key conversations or catch missed moments.

PRIVATE LENDER ROUNDTABLES This year marks the 10th gathering of AAPL’s Private Lender Roundtables, where the format gets deliberately smaller. Participants break into peer groups to tackle practical challenges, compare strategies, and trade the kind of hard-earned intelligence that rarely appears on a conference stage. The conversations are candid; the relationships often outlast the conference

DESIGNATION COURSES Attendees looking to put a credential behind their expertise can pursue AAPL-backed certification through the Certified Private Lender Associate (CPLA) or Certified Fund Manager (CFM) programs. Each combines a full day of classroom instruction followed by a rigorous exam.

FALL 2026

103

Conference Preview

NETWORKING Networking starts before the opening session and continues long after the last one ends. The AAPL App makes it easier to find fellow attendees, see who’s attending what, exchange messages, and use Scan to Connect to capture contact information and export to a CRM. Then there are the decidedly less digital opportunities: breakfast, coffee, receptions, parties, hallway conversations, vendor-floor meetings, and whatever happens when 1,000 private lenders occupy the same space for two days.

Monday, Nov. 9

Tuesday, Nov. 10

1 pm Pickleball Tournament // Trade the conference room for

7:30 am Networking Breakfasts/Breaks & All-Day Coffee // If

the court in a pickleball tournament hosted by Best Lending Co

the cooler is networking central at the office, cuisine, and coffee

at The Plaza Hotel & Casino. Bring a friendly competitive spirit

are the conference watering holes. This year, Scotsman Guide

and your best excuse for that third-shot drop.

keeps you fueled with food while your caffeine buzz comes courtesy of PropMix.io.

7 pm VIP Reception at the Soleia in The Vanderpump // Enjoy cocktails and hors d’oeuvres while catching up with VIPs

6 pm After-Hours Reception // Continue conversations at

from across the country, all overlooking the gorgeous Las Vegas

this after-hours networking reception, sponsored by Baker Tilly,

Strip at Soleia’s poolside. This exclusive reception is RSVP only;

where attendees, sponsors, and speakers mingle while enjoying

confirm your entry via the AAPL Annual Conference App.

complimentary bites and two drink tokens. 9 pm Official After Party // Not ready to turn in? AAPL, RCN Capital, and National Real Estate Insurance Group are hosting our official After Party in the F1 Arcade at the Caesars Forum Shops.

MEET YOUR HOSTS Looking for a friendly face? This is the AAPL team that has your back.

Blair Pierce

Kat Hungerford

Chrissy Spencer

Linda Hyde

Carmen Fields

Craig Johnson

Ryan Casey

Operations

Project Manager

Executive Assistant

President

Strategic Relationships

Chief of Staff

Business Development

Executive Editor

104

PRIVATE LENDER BY AAPL

CHANGING UP WITH DR. KEVIN GASKELL Don’t miss this year’s conference keynote. “The biggest decisions rarely feel safe … they do feel right enough to commit to.” In the same year Dr. Kevin Gaskell set a world record for the

earn a BMW executive walking into Porsche GB headquarters for

fastest row across the Atlantic, the BMW executive set the

the express purpose of stealing him away in 1996.

wheels in motion for his own personal new frontier.

Gaskell sees the leadership style that earned him a “fixer”

“I had one of the best roles in the automotive industry,” Gaskell

reputation differently now. “My younger self believed that

said in an interview with AAPL. “We had built a superb team,

leadership meant being gung ho, at the front, setting the pace,

achieved record performance, and created real momentum.”

having the answers and driving people forward,” he said. “I still

In four short years, Gaskell had taken BMW Great Britain from

believe leaders must be clear, ambitious, and accountable.”

a position of strength into extraordinary sales growth, changing

“They create belief in others,” Gaskell said. “They ask better

up—or “upshifting” on this side of the pond—with the same deceptive force as BMW’s then-new M5 series: understated at first glance, then startlingly quick once the throttle opened. The phrase would prove an apt description of Gaskell’s career. His next race was to start a company of his own, a decision he describes as “one of the moments I was most uncertain about my own judgement.” “…There was no guarantee of success and no corporate structure to protect me.” He knew he couldn’t remove fear, he said. But he could do the work, trust the evidence, and make the decision to “have the courage to act.” “It was time to test myself in a different way,” Gaskell said. “I wanted to build something of my own.” If BMW was a test of making a mark in favorable driving conditions, much like Porsche’s late-run 964 generation 911s, his earlier tenure at Porsche GB came with considerably more bump steer on choppy British B-roads. He’d risen through the German automaker’s ranks before his appointment to managing director of its British division in 1991. Porsche GB was near bankruptcy, suffering from collapsed sales, tanking morale, and the early-’90s equivalent of a one-star customer rating. Britain was in the middle of an economic

questions. They build confidence, capability and ownership across the team. … They create the conditions for genius to emerge.” Gaskell would go on to trade the controlled conditions of the corporate world and British roadways for the unforgiving demands of open water. “In an ocean rowing boat, thousands of miles from land, you face exactly the same human challenge,” Gaskell explained. “Both situations carry risk. Both test your patience, confidence, discipline, and trust in the team. Extreme expeditions have long been another proving ground for Gaskell. He’s climbed some of the world’s highest mountains and walked to both the North and South Poles in addition to joining the crew that set the Atlantic rowing record in 2020. “You cannot control the weather, the market, the economy or every competitor, but you can control how you respond,” he continued. “You can choose clarity over confusion. You can choose energy over complaint. You can choose to keep pulling together when the easier option is to stop.” For Gaskell, the conditions will always change. The leader’s job is to keep the team driving through them. “I have learned that resilience is not some legendary quality reserved for adventurers,” Gaskell said. “It is a business discipline,

downturn while Porsche’s maintenance costs soared, and

and it can be built in every team.”

customers criticized its inventory for riding too hard.

Dr. Kevin Gaskell will bring that perspective to AAPL’s Annual

The self-professed “naïve 32-year-old” rebuilt the organization,

Conference as its keynote speaker, drawing on a career that has

restoring its culture, dealer relationships, and, ultimately, sales.

taken him from struggling automotive operations to record-

The sharp reversal is perhaps best illustrated by its leap from

setting growth, from corporate leadership to entrepreneurship,

dead last in national customer service surveys to uncontested

and from the boardroom to some of the world’s most

first. The story goes that the recovery was staggering enough to

challenging environments. FALL 2026

105

Conference Preview

THE SUPPORT BEHIND THE EXPERIENCE

TITLE SPONSORS

An event of this scale takes an industry behind it. Our sponsors bring the technology, capital, services, expertise, and resources that make #AAPLANNUAL useful long after attendees leave Vegas. Their support also helps AAPL invest in the work that happens between conferences, from education and credentialing to advocacy, ethics, fraud prevention, and other initiatives designed to strengthen the private lending profession. Thank you to the companies investing in this community.

PLATINUM

GOLD

106

PRIVATE LENDER BY AAPL

SILVER

EXHIBITORS BACKFLIP BUSINESS SCREEN DIRECTED IRA DIYA FINANCE DUNER & FOOTE DYLAN BLAKE CUSTOMS ENTITY SCAN FCI LENDER SERVICES GENESIS CAPITAL

GRAND FINANCIAL MANAGEMENT INC. ICECAP GROUP KIAVI

PRIVATE MORTGAGE FUND SERVICE 1ST A COVIUS SOLUTION SERVICING PROS SILVER HILL CAPITAL LLC

NAN NATIONAL REAL ESTATE INSURANCE GROUP

TRINITY LIFE INSURANCE COMPANY

NOTE SERVICING CENTER

US REAL ESTATE INVESTOR SERVICE ASSOCIATION (USREISA)

ONE82

VERIVEST

PETRA LOAN SERVICING

ALL OTHERS ALTO CAPITAL

LENDER LINK

STACKINTEL

ASKBOBAI

LIGHTNING DOCS

SUPERIOR LOAN SERVICING

BAKER TILLY

NATIONAL LENDING EXPERTS

THINK REALTY

BUILD CHECK PRO

PROPMIX.IO LLC

VALUELINK

HI FREQUENCY MARKETING

RENOVO FINANCIAL

IMPACT OTHERS

SCOTSMAN GUIDE

FALL 2026

107

Conference Preview

2026 EXCELLENCE AWARDS Our industry is built by the people willing to do more than run their own businesses. They teach. They mentor. They solve problems. They invest in their communities and help move the profession forward. Each nominee was put forward by someone who saw that work firsthand and believed it deserved recognition. The winners will be announced during AAPL’s State of the Association at #AAPLANNUAL.

Rising Star Recognizing members whose accomplishments over the past year signal exceptiona leadership and momentum.

ALEX KADDAH, LIQUID LOGICS “Since joining Liquid Logics and rising to the COO responsibilities, Alex has demonstrated a rare ability to combine technology, people, and team leadership to elevate not only his company but the industry as a whole. Alex represents exactly what a Rising Star should be: a forward-thinking leader with vision to see what is possible, leadership to bring people together, and the ability to execute ideas that create meaningful and lasting change across the private lending industry.” — Sam Kaddah, Liquid Logics

BRYAN KESTER, SITEWIRE “Bryan Kester, CEO of construction oversight platform Sitewire, has grown considerably and is the only private lending technology company in the Housingwire Tech 100. Under his leadership, Sitewire has scaled its virtual inspection service and draw management software to help 200+ lenders safeguard $4 Billion in rehab, ground up and multifamily projects in 2026. And lenders on Sitewire grew 12% while most lenders saw flat or negative growth.” — Layla Van Buren, The MicDrop Agency

MELISSA MARTORELLA, FORTRA LAW “I have had the privilege of working alongside Melissa for 11 years and have had a front-row seat to her incredible professional growth and leadership. What sets Melissa apart is her drive to improve—not only those around her, but herself as well. She challenges her team to reach their full potential while continually setting ambitious personal goals. This past year, she completed her first marathon, competed in HYROX competitions, and has embraced new hobbies. Melissa is an exceptional leader, role model, and teammate.” — Ruby Boulanger, Fortra Law

ALEX MORA, MERCHANTS MORTGAGE & TRUST “Alex has built his career around a clear mission: opening doors in real estate investing for the Latino & Hispanic community. Since entering the industry in 2022, he’s mentored entrepreneurs and drawn on his own journey as an investor. His involvement centers on lifting up Latino and Hispanic investment opportunities in an industry where they’re too often underrepresented. His personal loan production has grown nearly 150% YOY—a reflection of his dedication and the community he’s built.” — Lauren Lorey, Merchants Mortgage & Trust

BRANDO TESSAR, CV3 FINANCIAL SERVICES “Brando Tessar’s promotion this year to Senior Vice President reflects an uncommon combination of talent, intensity, and selfless leadership. He has led his team beyond $1.2 billion and personally surpassed $250 million in three years, yet his greatest impact is how he elevates others. Brando treats every loan as his only loan and every teammate’s challenge as his own—mastering systems, restructuring complex deals, building training tools, and relentlessly advocating for clients and colleagues.” — Gina Comeaux, CV3 Financial Services

ASHLEY WINTER, BUILD CHECK PRO “Ashley made the bold transition from lender to vendor to help build Build Check Pro around the challenges she experienced firsthand in construction lending. In just over a year, she has helped grow BCP from an idea into a platform gaining strong recognition from lenders for its ease of use, transparency, and ability to simplify the construction draw process. Her industry knowledge, entrepreneurial mindset, and commitment make her an excellent candidate for AAPL’s Rising Star Award.” — Leonardo Benatar, Build Check Pro

108

PRIVATE LENDER BY AAPL

Member of the Year Recognizing a member whose expertise and commitment have made a distinctive impact on AAPL and the private lending community.

MEGAN CASTLETON, CONSTRUCTIVE CAPITAL “Megan Castleton is a standout leader. Throughout her 30-plus-year career, she has helped shape lending operations, underwriting systems, and risk management practices. Beyond her professional accomplishments, Megan actively contributes to the industry through her work on AAPL’s Fraud Steering Committee, AAPL courses, speaking engagements, WIPL leadership, and direct support of clients. Her commitment continues to make a meaningful impact across the private lending community.” — Greg Hohnstein, Constructive Capital

CHARLES FARNSWORTH, 1892 CAPITAL PARTNERS “I have known Charlie for years (I mean, who hasn’t?), and in all of those years, he has always been the same: honest, ethical, and a brilliant SME in our industry. Not only does he look for every way to help and bring clients to successful funding, he is also the first person to say a deal won’t work in its present form, but here is another solution that could be a winner. Charlie is exactly the kind of guy we should aim to be more like. Thank you, Charlie, for years of great business and quality advice.” — Scott Ward, Think Realty

JO JONES, BRIC “Working with her is truly inspiring. Her passion, drive, and determination stand out in everything she does. With over 25 years of experience in private lending, she is not only an outstanding businesswoman but also a thoughtful listener who understands her clients’ needs and serves them with transparency and integrity. Jo is generous with her knowledge, an excellent mentor, and always willing to share what she has learned. Most importantly, she believes in people and gives opportunities to those she sees potential in!” — Nicole Gianoli, Bric Collective

PENNY ROACH, TRINITY REAL ESTATE SOLUTIONS “Penny has dedicated more than 25 years to advancing the construction and fix-and-flip industry through deep industry expertise, innovative solutions, and a relentless commitment to client success. She leads with collaboration, accountability, integrity, and a genuine commitment to taking care of clients—building trusted relationships and helping them navigate an evolving industry. Her combination of deep experience, passion for the industry, exceptional leadership, and unwavering client focus makes her a highly deserving recipient of this award.” — Kristi Douglass, Trinity Real Estate Solutions

Community Impact Recognizing professionals who their communities or the industry through volunteerism, development initiatives, or other contributions.

BRIANA MALKOON, CARDINAL CAPITAL GROUP “After facing frightening medical challenges with her own daughter, Briana Malkoon saw firsthand what children’s hospitals mean to families in their hardest moments. She turned that experience into action by launching Cardinal Cares, the charitable arm of Cardinal Capital Group, and rallying her company, partners, and community around families facing similar challenges. In less than a year, Cardinal Cares has raised more than $250,000 for Boston Children’s Hospital and Connecticut Children’s.” — Nina Gozzi, Cardinal Capital Group FALL 2026

109

THIS MAN ISN’T CHEERING FOR YOU.

Conference Preview

But he is rooting for his team with what the pros call “high-attentive engagement” when viewers have stronger brand recall. Get this man’s attention (and more like him) with AAPL’s CTV live sports streaming package.

THE GAMEPLAN.

1 Get started: Email sales@aaplonline.com. team builds your ad to spec with 2 Our no long-term contracts. your ideal viewer based on interest, 3 Target demographics, viewing habits, and zip code. during premium streaming, 4 Advertise brand-safe live sports. 5 Retarget seamlessly across devices. 6 Track performance: site visits, conversion rates, ROAs, and more.

SAMPLE SPORTS CONTENT PARTNERS (VIA JAMLOOP)

110

PRIVATE LENDER BY AAPL

FALL 2026

111

Vendor Guide

FALL GUIDE If you’re looking for a service provider with real experience working with private lenders, this guide is your starting point. In each issue, we publish a cross section of specialties. These providers do not pay for inclusion. Instead, we vet them by reviewing their product offerings and talking to private lender references. AAPL members can access all vendors online at aaplonline.com/vendors.

WINTER

SPRING

SUMMER

» ACCOUNTING » APPRAISERS & VALUATIONS BUSINESS CONSULTANTS » » CAPITAL PROVIDERS DEFAULT & LOSS MITIGATION » » DATA » LEGAL SERVICES » ENVIRONMENTAL SERVICES » WAREHOUSE LENDERS » LEAD GENERATION » NOTE BUYING/SELLING

DEVELOPMENT COST ESTIMATES

DEVELOPMENT COST ESTIMATES Partner Engineering and Science, Inc.

cisinspects.com

partneresi.com

(707) 838-1679

(800) 419-4923

(888) 456-4888

Commercial Construction Management

» Draw Management » Project Feasibility Studies » Contractor Reviews » Title & Escrow Services PRIVATE LENDER BY AAPL

Alefy

» Portfolio Risk Intelligence Alterity Group, LLC alteritygroup.com (716) 306-3674

» Loan Origination Reviews » Insurance Renewal Compliance » Monitoring Business Screen Business Screen (216) 770-7846

DUE DILIGENCE

graniteriskmanagement.com

» End-to-End Residential &

DUE DILIGENCE

alefytech.com

» Construction Risk Management » Owner Representation » Environmental Due Diligence » Energy & Sustainability Consulting » Property Condition Assessments » Industrial Hygiene » ALTA Surveys » Zoning Reports » Surety Bond Workout » Policy Evaluation » Forensic Engineering

Granite Risk Management

112

» BROKERS » DEVELOPMENT ESTIMATES FUNDS CONTROL » » DUE DILIGENCE LOAN ORIGINATION SERVICES » » EDUCATION » LOAN SERVICING » FUND ADMINISTRATION » LOAN UNDERWRITING » INSURANCE » MARKETING » RECRUITMENT

Construction Inspection Specialists LLC Risk » Overall Management Services » Construction Budget Development » Cost to Construct Analysis » Cost to Complete Analysis » Plan & Cost Reviews » Construction Progress Inspections » SBA/TI Inspections » Annual Portfolio Inspections » Property Condition Assessments

FALL // THIS ISSUE!

AFX Research afxllc.com (877) 848-5337

» Title Updates » Vesting Reports » Lien Searches » Portfolio Reviews » Foreclosure Checks

» Business and Executive Background Checks » International Background Checks » Continuous Screening Checkpoint Screening checkpointscreening.com (888) 534-1233

» Individual and Business Credit Reports » Background Checks » Criminal Searches

DUE DILIGENCE

EDUCATION

INSURANCE

Consolidated Analytics

Fortra Conferences

Ross Diversified Insurance Services, Inc.

consolidatedanalytics.com

fortracon.com

rossdiv.com

(224) 420-2450

(949) 379-2600

» Due Diligence » Valuations » Fulfillment » Consulting

» Networking » Raising Capital » Deal Flow » Lead Generation

LendlyX, Inc.

National Lending Experts

lendlyx.com

nationallendingexperts.com

(844) 926-0092

(619) 865-3177

» B2B SaaS

Scalance Global Solutions scalanceglobal.com (412) 397-1519

» Title Search » Lien Sweeps » Payoff Verification » Land Diligence » Portfolio Services » Foreclosure Support Trinity Real Estate Solutions trinityonline.com

» Draw Inspections » Risk Mitigation » Feasibility Reviews » Fund Control Truepic

High Divide Management highdividemgmt.com (816) 807-4039

» General Ledger » Financial Statements » Audit Support » LP Reporting Servicing Pros Inc servicingpros.com

» Fund Administration » Loan Servicing » Investor Reporting INSURANCE

truepic.com

InsureMAC

(619) 512-9759

insuremac.com

» Virtual Inspection Platform » Media Verification EDUCATION

(617) 283-0996

» Lender-Placed Insurance » Mortgage Impairment Insurance affiliate.nreig.com/AAPL

aaplonline.com

» Residential Insurance » Commercial Insurance

(913) 888-1250

trinityriverfinancial.com (812) 887-0443

» Force Placed Insurance » Commercial Insurance MARKETING Hi Frequency Marketing hifrequencymarketing.com

» Ad Targeting » Geofence » Retargeting

RetroCurrent Marketing retrocurrentmarketing.com (470) 208-0433

» Marketing Strategy » Content Capture » Media Management RECRUITMENT & HEADHUNTING Huffman Associates LLC huffmanassociates.com (631) 969-3602

» Private Lender Recruitment » Executive Search

National Real Estate Insurance Group

American Association of Private Lenders

» Annual Conference » Quarterly Private Lender Magazine » Online and Classroom-Style Courses » Certifications » Webinars » Compliance and Legal Resources » Downloadable Guides » Templates

Trinity River Financial Insurance

FUND ADMINISTRATION

(877) 313-0095

(888) 573-8025

(800) 210-7677

» Property Insurance » REO Insurance

(888) 741-8454

Priority Title and Escrow prioritytitle.com (915) 525-6699

» Title & Escrow Services

Are you a vendor? Nominate here!

aaplonline.com/nominate

FALL 2026

113

Last Call

A Beginner’s Advantage After three decades in conventional mortgage banking, I discovered my greatest asset was a willingness to become a student again.

STEPHANIE GOSSETT, GENESIS CAPITAL

y career has never been about playing it safe. For over three decades, every major opportunity has come from stepping outside my comfort zone, taking calculated risks, and embracing change. I started in residential mortgage lending at a well-known national bank in New York City. Beginning in an entry-level position, I eventually advanced to executive leadership. Like many professionals, the pandemic prompted a pause for reflection. After decades in banking, I was able to retire— but not for long. For the first time, I could think deliberately about what had energized me most throughout my career. The answer was clear: wholesale lending. I returned to my roots as an account executive for a national wholesale lender. Many viewed it as a step backward; I saw an opportunity to reconnect with the part of the business I loved most. It was then that I gained exposure to a sister company focused on private lending, including bridge loans, fix-and-flip financing, and ground-up construction loans. The challenge immediately intrigued me. The more I learned about private lending, the more I realized it addressed a critical part of the investor journey that many traditional mortgage professionals did not fully understand. After spending

114

PRIVATE LENDER BY AAPL

decades mastering conventional mortgage products, I suddenly found myself learning an entirely new business.

tremendous expertise in investor financing but often have limited connections to the broader mortgage broker community.

The biggest surprise was realizing that private lending wasn’t just a different product—it was a different way of thinking.

I understood why those brokers struggled; not long before, I was in the same position. What I discovered was that most mortgage brokers genuinely want to understand private lending and better serve their investor clients. The challenge is often confidence, education, and access.

Rather than focusing primarily on income, employment history, and debt ratios, private lending often evaluates a borrower’s experience, investment strategy, project viability, and execution capabilities. It taught me there are many ways to assess risk, and understanding the borrower’s story can be just as important as understanding their financial statements. It was intimidating to leave behind the comfort of expertise and become a student again. Yet that challenge became one of the most rewarding experiences of my career. As my career evolved from conventional mortgage banking into private lending, I recognized an untapped opportunity. I saw not two separate industries, but one investor journey supported by two distinct financing communities that needed to work together. Many mortgage brokers successfully help investors secure DSCR financing for long-term rental properties but often lack access to the short-term bridge, renovation, and construction financing that frequently begins an investor’s journey. Private lenders, likewise, possess

That realization sparked a new passion for me: education. Today, I dedicate significant time to helping mortgage brokers understand private lending. Through monthly educational webinars, scenario-based coaching, conference presentations, and one-on-one mentoring, I help brokers learn how bridge loans, fix-and-flip financing, construction lending, and other private lending solutions fit into an investor’s overall strategy. If there’s one lesson others can take from my journey, it’s that expertise should never become a limitation. For someone earlier in their career, my advice is simple: Don’t let your current expertise define your future potential. Be willing to step outside your comfort zone, remain curious, and continuously invest in learning. The skills that make you successful today may open the door to opportunities you cannot yet see.

FALL 2026

115