For residential, there’s some adverse incentives at play. If I borrow from someone and give them equity, my incentive to improve (or even maintain) the property is dramatically curtailed.

Conversely, if we try to alleviate that, maybe a lender ends up on the hook for a call for their 10% of my $500K addition to maintain their pro-rata. That ends up subsidizing remodels which tend to pay back less than $1 for $1.