Will New Investor Tool Mean Big Change for Reverse Mortgage HMBS Market?

A shift in a commonly used investor tool could stand to make big waves in the secondary market for reverse mortgages. The Yield Book, an investor modeling tool produced by CitiGroup, allows investors to assess and analyze spreads and risk measures by providing investment models for different products.

Never before has the Yield Book covered reverse mortgages or HECM Backed Mortgage securities, but sources tell RMD a reverse mortgage Yield Book release is on the way, and it will change the way the secondary market views these investments. Pending the release of the HECM yield book, which sources say will be later this month, they will be able run this analysis for the first time.

There is another important distinction that a reverse-specific Yield Book would offer: One HMBS trader told RMD there are many buyers in the market who will only consider an investment if it is modeled on Yield Book. The trader says the inception of such a model is “a long-awaited change in the market,” and that the potential for it to open the door to new investors as well as to compare HECMs side-by-side versus other assets is game changing.

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HECM interest has risen in recent weeks on speculation about the Yield Book release, he says.

When asked to confirm the release of the new Yield Book, a Yield Book employee declined to comment.

Written by Elizabeth Ecker

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  • Could the new yield book model for the secondary have an adverse effect for seniors and on the pricing as well as the securitizing of reverse mortgages? John A. Smaldone

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