On June 11, 2025, Morningstar DBRS, in partnership with Katten Muchin Rosenman LLP, hosted a panel discussion at Katten’s New York offices spotlighting Home Equity Investments (HEIs) and Residential Transition Loans (RTLs) – two fast-growing segments of the residential credit sector.
The event explored the structural features that distinguish HEIs and RTLs, key considerations for investors, and how broader U.S. housing trends are shaping the future of these asset classes.
The event featured industry leaders from major banks, rating agencies, originators and investment managers in a wide ranging conversation regarding the current state of the US housing market, the role that capital markets play in providing efficient financing and innovative solutions geared toward providing differentiated investment opportunities in US single family housing.
The event explored the structural features that distinguish HEIs and RTLs, key considerations for investors, and how broader U.S. housing trends are shaping the future of these asset classes.
The event featured industry leaders from major banks, rating agencies, originators and investment managers in a wide ranging conversation regarding the current state of the US housing market, the role that capital markets play in providing efficient financing and innovative solutions geared toward providing differentiated investment opportunities in US single family housing.
1. At a national level, US housing remains undersupplied by millions of units due to a reduction in new home construction and the lowest amount of existing home sales since the Great Financial Crisis.
2. The shortage of homes, combined with investor appetite for higher spreads and attractive risk-adjusted returns, continues to fuel interest in alternative residential credit strategies.
3. Housing starts, indicating the number of new homes for which construction has begun in a given period, continue to lag the demand for housing due. Lenders, banks, and rating agencies are working together to develop solutions to create more financing opportunities for homebuilders.
4. The maturation of the RTL industry, including the advent of rated securitizations, has increased the overall universe of investors and further stabilized the industry’s access to capital.
5. At the same time, the RTL market remains highly fragmented, necessitating proper due diligence from investors with a focus on originator experience, borrower track records and conservative loan terms and structures.
For additional insights from the panel, read takeaways from Morningstar DBRS here.
