Radian sets the pace: modernizing RTL and DSCR loans

Lending for business purposes is going through a period of accelerated change. Increasing securitization activity, new entrants, stricter regulatory expectations and increased investor scrutiny are helping to reshape lenders’ thinking about RTL and DSCR products. As we move towards 2026, the industry is exploring both new opportunities and new pressures, prompting many to rethink efficiency, quality and systems that support long-term scalability. Rebecca Smith, Senior Vice President of Business Development at Radian Real Estate Management LLC, shares her perspective on changing investor expectations, the need for workflow modernization, and how hybrid valuation models and stronger oversight can help improve target business strategies.

Housing Wire: It appears there is continued interest in commercial lending, particularly Residential Transition Lending (RTL) and Debt Service Coverage Ratio (DSCR) products. What do you think is driving this interest today, and how do you see investor expectations evolving as we head into 2026?

Rebecca Smith: Interest in corporate lending, particularly RTL and DSCR, has grown significantly, especially following RREM’s first publicly rated RTL securitization last year. That milestone attracted new attention to the sector, and we expect the momentum to continue into 2026 and beyond as both RTL and DSCR are attractive products with tailwinds for future growth.

Although fix-and-flip lending has been around for a long time, RTL as an asset class is still relatively new in terms of public securitization. Likewise, DSCR securitized loans have been around for many years, but the loans were simply mixed in with standard non-QM housing deals. However, the demand we see today may reflect investors’ desire to own one or more of the country’s 17 million rental properties, or the need to build housing stock by renovating older housing stock.

HW: From a risk management perspective, what are the most common due diligence, valuation and draw review challenges you encounter among lenders and investors in the current BPL environment?

RS: Variability in lender requirements is a challenge in the marketplace. Radian Real Estate Management is equipped to meet this challenge, as we have seen before in the early days of single-borrower single-family rentals. We expect the BPL landscape to continue to standardize the process due to the emerging nature of securitizations, which will help ensure that lenders do not approach BPLs differently. Without the right processes and controls, variability could lead to operational inconsistency, which becomes more apparent as volume increases.

Interest rate volatility seems to be one of the biggest variables impacting the market right now, regardless of the variability of requirements. Interest rate fluctuations quickly change how attractive these products appear. Right now, demand is high because conventional lending has tightened, creating a competitive environment in which lenders are eager to deploy capital. That dynamic has also led to a wide range of guidelines and very little uniformity among lenders.

HW: What operational inefficiencies can arise when teams are forced to use disconnected systems or manual workflows?

RS: Many stakeholders still rely heavily on spreadsheets or subsystems that require multiple integrations, which can slow things down. Using a single platform, like Pyramid Platform, where due diligence, valuations and draw reviews happen in one place, helps eliminate friction and ensures a clean, end-to-end workflow.

In addition to lending, technology solutions must also provide efficiencies at scale, such as valuations, monitoring or disposition management if a default occurs. As we see a slight uptick in defaults, lifecycle equity may become even more important.

HW: What is your value proposition for solving BPL pain points, and how can Radian Real Estate Management’s solutions help reduce risk or cycle times?

RS: Pain points vary per lender, but in a market where fraud is receiving increasing attention, our value becomes especially clear. When risk increases, lenders often rely on third-party validation to make informed decisions. Our diligence services provide that extra layer of confidence in volatile periods.

Operationally, centralizing everything in one system can help reduce cycle time and minimize the number of touches. Files are moved through structured task management rather than distributed emails or uploads. We also provide APIs for LOS or portal integrations and tools to normalize data across systems, streamlining due diligence and generating assessments through a cohesive platform.

HW: What is the most striking feedback you have received from your customers?

RS: Lenders consistently emphasize the Appraiser-Reconciled BPO, offered by homegenius Real Estate. It is a hybrid appraisal where a licensed real estate agent completes a field BPO and a licensed appraiser agrees the final value. This is hugely useful for fix-and-flip and DSCR lending, where past performance and market trends matter.

The quality of the valuation is also an important consideration for us, especially given the recent concerns surrounding valuation fraud. Hybrid appraisals help improve reliability, speed and cost-efficiency and have become a key driver of new business as lenders look for alternatives to traditional appraisals.

HW: How do you think emerging complications such as regulatory scrutiny, capital market pressures and formation of investor expectations, etc., shape the way you think about quality, supervision and/or transparency in underwriting BPLs?

RS: I already see signs of what lies ahead. As business lending expands and competition increases, regulatory scrutiny following the Tricolor Holdings bankruptcy, investor expectations and even rising defaults could all influence the way the market thinks about supervision and transparency. More activity naturally increases risk, so RREM continually refines its processes based on market inputs, as it continued to do with respect to one borrower’s SFR diligence processes.

Right now, fraud is the main concern – not because it is widespread, but because recent cases have raised awareness. If regulation increases, lenders may pause to stabilize, potentially changing both volume and guidance. Whatever direction the market takes, we adapt.

HW: 2026 is just around the corner. What major shifts do you expect in RTL and DSCR loans? What should market participants do now to “help improve their products for business purposes?”

RS: I expect continued consolidation, more securitizations and new entrants, some of which could ultimately lead to mergers and acquisitions. Volume will likely continue to grow and the market will hopefully mature as more institutional capital enters the space.

A focus on efficiency and a push for greater uniformity in guidelines and valuation practices will likely be helpful in 2026. Hybrid valuation tools are likely to become more common, and linking multiple valuation methods – rather than just relying on a full valuation – can help increase speed and consistency. Now is the time to reassess guidelines and strengthen operational frameworks before volumes increase further.

RREM strives to be a collaborative service provider in the field of corporate loans, DSCR and diligence. It works closely with lenders, investors and brokers to identify emerging needs. Lenders want it, and RREM is working on scalable solutions that add real value as the asset class continues to grow.

© 2025 Radian Group Inc. All rights reserved. 550 East Swedesford Road, Suite 350, Wayne, PA 19087. Single-family rental services provided by Radian Real Estate Management LLC. Licensed property management company in UT (license #9172198-MN00) and NV (license #ASM.0000217). Appraisal services provided by homegenius Real Estate LLC and homegenius Real Estate Inc. (jointly dba homegenius Real Estate). 6330 South 3000 East, Suite 600, Salt Lake City, UT 84121. Tel: 877-500-1415. homegenius Real Estate LLC and its wholly owned subsidiary are licensed in every state and the District of Columbia. This communication is intended for the use of business professionals only and is not intended for distribution to consumers or other third parties. This does not constitute an advertisement as defined in section 1026.2(a)(2) of Regulation Z.

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