Bad Mortgage Loans in Baltimore Send Wall Street a Warning

Private mortgage lenders with the backing of Wall Street’s biggest names are facing an unsettling reality: Their breakneck growth has made them increasingly vulnerable.

Armed with capital from firms like KKR & Co., Apollo Global Management Inc.’s Athene and Singapore’s Temasek, lenders to home flippers and small-time real estate investors have cranked up originations in recent years. What was once an industry backwater churned out nearly $140 billion in debt last year and looks primed for another annual record.