In Plato’s popular allegory of the cave, an observer looks upon a wall of shadows as reality unfolds behind him, showing him only second effects, not reality as it happens.
If that person were a tired U.S. homeowner at the end of a long day’s work, with growing revolving debt and a slightly tarnished credit score, the shadow of every mortgage payment that homeowner had ever made would dance across his living room walls. In the current market, that homeowner would struggle to qualify for an affordable second lien to access their home equity.
For capital markets supporting the U.S. mortgage system, the second-lien shadow that the first-lien market now casts is the roughly $34 trillion total addressable market (TAM) in homeowner equity as of t...