Rapid Growth of HMBS Driving Increased Demand for Independent Evaluations
Interactive Data Corporation (NYSE: IDC), a leading provider of financial market data, analytics and related solutions, today announced that its Pricing and Reference Data business is now providing daily independent evaluations for fixed-rate reverse mortgage-backed securities (HMBS) issued under the Government National Mortgage Association (GNMA) Home Equity Conversion Mortgage (HECM) program. This program is designed to provide liquidity to reverse mortgage lenders. Interactive Data is among the first data providers in the industry to offer daily evaluations for fixed rate GNMA HMBS.
Reverse mortgages provide an alternative to traditional home equity loans for homeowners seeking to monetize the equity in their homes. As the baby-boomer generation enters retirement age, it is expected they will turn to the equity in their homes to provide supplemental cash flow during this time period of their lives.
Origination volume in 2009 for GNMA HMBS was approximately $8.5 billion, up more than 600% from 2008.* GNMA has indicated that it expects 25-30 percent growth in HECM originations.** Despite these increases, holders of GNMA HMBS have been challenged to find independent evaluations for these securities. Holders that may have previously relied on broker quotes or information from a dealer to assess current market value can now realize the benefits of subscribing to independent evaluations of fixed rate GNMA HMBS as an input to their valuations process.
“GNMA HMBS have undergone dramatic growth over the past few years, and we find that many of our clients -- especially insurance companies, mutual funds, and custodian banks -- are increasingly requesting evaluations for these structures,” said Liz Duggan, managing director, Evaluations, Interactive Data Pricing and Reference Data. “Our clients can now subscribe to our independent evaluations for fixed rate GNMA HMBS as an input to their valuations process.”