Why second liens won, and equity never got a product

After twenty years in conventional lending, I’m watching short-term second-position bridge loans at 12% to 22% become the main product keeping my colleagues and me busy. What’s scarier to think about is that I’m busier than I have ever been. According to ICE’s June 2026 Mortgage Monitor, second liens are showing no signs of slowing down. How we got here is not due to higher interest rates, inflation or even good old-fashioned human greed. We are in this mess because equity never got a product. The dead capital problem hiding in American real estate Hernando de Soto, the Peruvian economist, popularized the term “dead capital” in his book, The Mystery of Capital, to describe an estimated $9.3 trillion in real estate held by poor families in developing and former communist countries. These families may live on and control valuable property, but without legally recognized title, they cannot reliably sell it, borrow against it, use it as collateral or transfer it in a way the market recognizes. The point is, they may have an asset, but they do not have capital. Without a functioning market and enforceable ownership rights, that property’s value remains trapped, leaving people locked out...