Authors Jesse Goldberg and John V. Santilli

Is it time for a universal private-lending application?

In our first article, Jesse Goldberg and John V. Santilli explore the standardization of applications across private-money loans as an answer to a 1003 Uniform Residential Loan Application.

Efficiency

Jesse: Our industry has long relied on a patchwork of systems: conventional loan origination software (LOS) platforms that require extensive customization, fully proprietary systems built from scratch, and niche private-lending software that varies widely in implementation and datapoints. A major cost advantage of a standardized application is the reduction, or potential elimination, of expensive enhancements and custom development each company must undertake.

Beyond technology costs, there are hidden staffing costs and delays. Because each company’s programs differ from both one another and the conventional mortgage industry, training new hires quickly can be difficult and expensive. A standardized application, aligned across companies, would strengthen the broader ecosystem and improve career mobility for current and future employees in private-money lending.

John: Private lending at its core is just that—private! The industry emerged from entrepreneurial individuals or companies that recognized they could unlock lending opportunities by stepping in where banks and other traditional lenders wouldn’t. You could argue the first application was defined by Uncle Louie or Uncle Morty—the days of a knock on the door, a look in the eye, a handshake, and a man or woman’s word. Talk about speed and efficiency!

Though most private lenders are looking for the same seven to 10 variables to construct standardized loan terms, the real estate investment community still enjoys many who keep the true spirit of independent lending terms. The evidence appears often during conversations in AAPL’s Certification Program (CPLA). Uncle Louie and Uncle Morty often seek instruction on how to scale, but while keeping their own disciplines and success in mind.

Borrower Experience

Jesse: Some may view proprietary applications as a retention tool, but the reality may be that they increase the stress of our borrowers. Due to concentration limits and market niches, investors routinely rely on multiple private-money lenders. When borrowers must submit different information, formatted in different ways, to each lender, many express fatigue at answering the same questions in slightly different forms.

By creating a uniform application built around global minimum standards, we can reduce borrower friction, eliminate redundant effort, and meaningfully minimize borrower fatigue.

John: Stick to the basics. Borrowers want speed, reliability, competitive programs and costs along with an easy process to access renovation dollars. The 1003 application is an example of an all-encapsulating document across any/all government-regulated products that evolved into nine pages of mandatory and unnecessary fields. The first sign of borrower stress comes when they feel like they are getting a financial colonoscopy with a request for information they feel is too personal or not relevant to the transaction.

Many private-lending brokers have tried to create a universal intake form or mini application they can use across multiple lenders. While these applications can be helpful, they are often incomplete, contain clerical errors, or don’t align with lender- or product-specific requirements. When a borrower or broker needs to shop a nonstandard deal, each lender may request its own variation of the form based on the specific scenario. This is why many loan origination systems in private lending rely on dynamic fields that adjust to the requirements of different RTL or DSCR products.

Underwriting

Jesse: Operationally, underwriters spend significant time deciphering the “code” of a loan application once it lands on their desk. The core questions are often the same, but every company asks them differently. For example:

What is the borrower’s intention? The phrasing varies widely, though we’re all aiming to understand the exit strategy and business purpose.

How does the borrower’s past experience apply to the subject loan? Even the definition of “experience” can differ between balance-sheet lenders and those relying on the secondary market. In addition, the timeline of acceptable and applicable experience may result in many REO schedules needing to be prepared.

What is the borrower’s cost to date on construction? Allowable or recognized costs vary meaningfully from lender to lender.

These variations lead to confusion, repetitive back-and-forth interactions, and ultimately delays for borrowers. In an industry built on delivering fast, reliable capital to investors, a single uniform application could materially reduce bottlenecks and accelerate decision-making.

John: At its root, an underwriter’s role and responsibility is to evaluate risk by reviewing all the collected information in accordance with the lender’s credit parameters and then make a credit decision. This is about not only efficiency but also speed.

What if the smaller lender does not have a set of written guidelines but sometimes tries to sell loans to larger shops? Do they need a universal application? How much information in a universal application is even applicable?

What if the larger lender carries a universal application? Is that applicable for DSCR and RTL products? Is it efficient for them to be hunting through the universal application searching for the data points? Or is time better spent looking at applications built for ground-up versus a fix-and-flip versus a DSCR-specific application?

The net effect of a 1003-style application is that an underwriter managing information gaps slows down the review process and forces more touches. 

Secondary Market

Jesse: Lenders who sell to aggregators or directly into the secondary market have had to adapt their data tapes to each investor, often squeezing private-money products into conventional or non-QM frameworks. With the growing success of RTL and DSCR securitizations, the spotlight on our industry has only intensified.

A cohesive and uniform loan package would streamline conversations with capital partners, improve data comparability, and enhance the scalability of securitizations. Standardization helps counterparties speak the same language, which is something our market is increasingly demanding.

John: The secondary market is one of the only areas where a universal process in the private-lending space almost makes sense—until you start thinking about how each buyer and capital partner uniquely evaluates their assets differently. There is simply no standard. Each institution and capital source monitors and manages many things alike and differently. Some are controlled by unique internal disciplines and guidelines. Others are held to standard requirements for securitization options.

Open Questions

Although a unified application may address several long-standing challenges in our industry, building one will require true collaboration and, as John notes, a willingness to allow for flexibility. Guidelines, capital structures, and required data points vary meaningfully across lenders. Any attempt at standardization must account for these differences rather than force every company into a rigid mold. Otherwise, the solution meant to streamline our processes may end up creating new inefficiencies for the very operators it’s designed to support.

Where John and I strongly agree is that the existing Form 1003 is not an appropriate foundation for private lending. It simply cannot capture the business-purpose information our RTL and DSCR products rely on. Its structure is too long, too conventional-mortgage-driven, and too borrower-intensive to meet the speed and clarity investors expect. If our industry wants to evolve, we need to rethink our application frameworks from the ground up and decide whether a modern, right-sized alternative to the 1003 is worth pursuing—and if so, what it should accomplish.

If we do strive to create a universal application, the process should be guided by four core pillars:

Borrower experience. How do we create a streamlined, minimally redundant set of questions that still produces accurate and meaningful information across RTL and DSCR loans?

Efficiency. How do we design an application that reduces operational friction, improves data quality, and alleviates bottlenecks for both smaller shops and scaled lenders?

Underwriting. How can lenders limit borrower questions to only what’s essential while maintaining enough flexibility to obtain product-specific details and avoid over-conditioning?

Secondary market. How do we develop common fields and definitions that align with capital-market expectations, enhance comparability, and support loan sales and future securitizations?

Any universal application must enhance, not hinder, decision-making, strengthen data consistency, and preserve speed and reliability. Continuing this dialogue will help determine whether a new standard is the evolution our space needs, or a solution searching for a problem.