Lending money to home buyers is a commodity business that has no barriers to entry, requires little capital, does not need upfront capex and easy to scale up as well as get out off. No wonder everyone is getting into.
Home Lenders generally earn about 15% ROE as that is the cost of equity given the risk profile of the business. but currently many lenders are earning 18-25% ROE with good growth potential. That is what is drawing new players to this industry. At 15% ROE and assuming a dividend payout ratio of 20%, a lender can grow at 12%. However, they are banking on high valuations of their equity to raise capital cheaply and grow faster than their sustainable rate before the opportunity window closes.
Along the way some lenders will realize that they have collected a bunch of NPAs but they will worry about that when that happens, until then they will pursue aggressive growth strategy.