A trade group representing private lenders has created a database to identify high-risk counterparties prior to funding real estate loans.
The National Private Lenders Association has launched the NPLA Watchlist to help real estate lenders, brokers and service providers spot individuals or entities that may warrant caution — or even avoidance — in order to protect their capital and maintain credit standards.
“The industry asked for a tool that plugs into intake and pre-funding. This is that tool,” said Jonathan Hornik, NPLA executive director and managing partner of Private Lender Law. “Members can search a name or entity, see whether a watchlist match is present, and apply heightened diligence — while keeping submissions confidential and contributors anonymous.”
In its 2025 Fraud Report released in September, Cotality noted that transaction fraud risk was 6.2% higher in the second quarter compared to the same period in 2024.
“The rise is tied to borrowers with multiple real estate purchases, transactions in areas with a high concentration of private lenders, and sales with multiple high-risk flags,” Cotality said in its report.
A report from the Federal Reserve Bank of Boston said the private credit industry has grown to about $1 trillion in 2023 from $46 billion in 2000, on the back of bank loans used to support this lending activity.
Because they are providing the liquidity, these depositories risk being the start of a financial crisis if defaults among private credit borrowers spike.
Figure Technology Solutions offers a multi-seller, multi-buyer secondary marketplace for private credit loans.
Such a list already exists in the conforming mortgage market.
Back in 2012, the Federal Housing Finance Agency created its Suspended Counterparty Program, a list of companies and individuals barred from doing business with the entities it regulates: Fannie Mae, Freddie Mac and the Federal Home Loan Banks.
The rules were updated in 2015, and in 2023, FHFA came out with a proposed rule to expand the number of entities on the list. This was redrafted in September 2024.
The NPLA noted that as this business grows, it naturally increases exposure to counterparties which might not meet a credit provider’s standards.
“A searchable, centralized watchlist helps surface elevated-risk names before closing, supporting pre-funding protection that reduces avoidable losses, repurchases, litigation, and operational disruption,” the NPLA release said. “By giving authorized users a fast, confidential way to check for matches, lenders can make earlier, clearer decisions about non-engagement or heightened review.”
The Watchlist compliments existing know your customer processes, along with title agent/settlement service provider verification, valuation review and loan closing standards.
