REVERSE MORTGAGES AND LINKED SECUR - COMPLETE GUIDE TO RISK PRICING A

Informationen zum Autor Vishaal B. Bhuyan has been involved in the "life markets" for over five years and has focused on analyzing and investing in life settlements, reverse mortgages, and other linked assets. He has advised a number of large investment funds on the longevity and mortality risk asset class and has been invited to speak at various investment and industry-specific conferences across the United States, Europe, and Asia. Bhuyan is also the editor and coauthor of Life Markets: Trading Mortality and Longevity Risk with Life Settlements and Linked Securities (Wiley) and will be releasing The Esoteric Investor (FT Press) in 2011. Klappentext An institutional investor's guide to the burgeoning field of reverse mortgage securitizationReverse Mortgages and Linked Securities is a contributed title comprising many of the leading minds in the Home Equity Conversion Mortgages (HECM) industry, including reverse mortgage lenders, institutional investors, underwriters, attorneys, and regulators.This book begins with a brief history of reverse mortgages, and quickly moves on to discuss how the industry has evolved-detailing the players in these markets as well as the process. It discusses the securitization of reverse mortgages and other linked securities and includes coverage of pricing techniques and risk mitigation. This reliable resource also takes the time to cover the current regulatory environment of the HECM market, which is constantly changing due to the current state of the real estate market.* Highlights specific strategies that will allow institutional investors to benefit from the resurgence of reverse mortgages and linked securities* One of the only guides to reverse mortgages and linked securities targeted towards institutional investors interested in securitized productsIf you want to make the most of reverse mortgages and linked securities, take the time to read this book. Zusammenfassung *Reverse Mortgage and Linked Securities is a contributed title that comprises of many of the leading minds in the HECM industry! including reverse mortgage lenders! institutional investors! underwriters! attorneys! and regulators. Inhaltsverzeichnis Preface. Acknowledgments. List of Contributors. Part One Reverse Mortgage Basics. Chapter 1 Reverse Mortgage Primer. Loan Disbursements. Overview of Lender Challenges. Summary. Chapter 2 The History of Reverse Mortgages - an Insider's View. Formative Years. Private Programs. First Lifetime Reverse Mortgages. Fannie Mae Stakes a Claim to the Marketplace. Roots of the Securitization of Reverse Mortgages. Summary. Chapter 3 HECM Explained Reverse Mortgages Originated through the Home Equity Conversion Mortgage (HECM) Program. Legislative History and Program Fundamentals. Disbursing Funds and Calculating Loans and Interest. Changes to the Program Following the 2008 Act. Consumer Focused Elements of the Program. Summary. Part Two Underwriting and Risk Analysis. Chapter 4 Underwriting Reverse Mortgages. Underwriting Life Expectancy. Life Settlement versus Reverse Mortgage Underwriting. Simplicity of the Current Reverse Mortgage Underwriting Process. Why Does Underwriting Matter? Proposed Elements of Reverse Mortgage Underwriting. Summary. Chapter 5 Risk Mitigation from Existing and Proposed Financial Products. Reverse Mortgage Risks. Agency versus Non-Conforming Loans. Summary. Chapter 6 Longevity Risk and Fair Value Accounting. Longevity Cost Calculator(TM) as a Loan Underwriting and Pricing Tool. Reverse Mortgage Loan Pricing Using the Longevity Cost Calculator Existing Accounting Framework. Suggested GAAP Compliant Met...

List of contents

Preface xi
Acknowledgments xvii
List of Contributors xix
Part One
Reverse Mortgage Basics 1
Chapter 1
Reverse Mortgage Primer 3
Loan Disbursements 4
Overview of Lender Challenges 6
Summary 6
Chapter 2
The History of Reverse Mortgages: An Insider's View 8
Formative Years 8
Private Programs 9
First Lifetime Reverse Mortgages 10
Fannie Mae Stakes a Claim to the Marketplace 12
Roots of the Securitization of Reverse Mortgages 13
Summary 15
Notes 16
Chapter 3
HECM Explained: Reverse Mortgages Originated via the Home Equity Conversion Mortgage (HECM) Program 17
Legislative History and Program Fundamentals 18
Disbursing Funds and Calculating Loans and Interest 19
Changes to the Program Following the 2008 Act 21
Consumer-Focused Elements of the Program 24
Summary 26
Notes 28
Part Two
Underwriting and Risk Analysis 33
Chapter 4
Underwriting Reverse Mortgages 35
Underwriting Life Expectancy 36
Life Settlement versus Reverse Mortgage Underwriting 37
Simplicity of the Current Reverse Mortgage Underwriting Process 37
Why Does Underwriting Matter? 38
Proposed Elements of Reverse Mortgage Underwriting 38
Summary 42
Chapter 5
Risk Mitigation from Existing and Proposed Financial Products 43
Reverse Mortgage Risks 46
Agency versus Nonconforming Loans 48
Summary 53
Notes 54
Chapter 6
Longevity Risk and Fair Value Accounting 55
Longevity Cost Calculator TM as a Loan Underwriting and Pricing Tool 61
Reverse Mortgage Loan Pricing Using the Longevity Cost Calculator 74
Existing Accounting Framework 75
Suggested GAAP-Compliant Methodology to Standardize Life Settlement Underwriting 77
Summary 78
Notes 79
Chapter 7
Risk Mitigation: Available Hedges and Products in Development for Risk Transfer 81
Hedging Crossover Components in the Capital Markets 82
Insurance Solutions 86
Summary 90
Note 90
Chapter 8
Criteria for Rating U.K. Reverse Mortgage-Backed Securities 91
Overview of Reverse (Equity Release) Mortgages 91
Reverse Mortgage-Backed Securitization 92
Mortality Assumptions 93
Prepayment Assumptions 94
House Price Increase Assumptions 95
Costs and Sale Period 97
Summary 97
Part Three
Tax Treatment 99
Chapter 9
U.S. Federal Income Tax Aspects of Reverse Mortgages 101
What Is a Reverse Mortgage? 102
Deductibility of Interest Payments on Reverse Mortgages 102
Securitization of Reverse Mortgage Loans via REMIC Structures 103
Practical Observations Regarding Investment Reverse Mortgage REMIC Securities 105
Summary 106
Notes 107
Part Four
Reverse Mortgages in Context 109
Chapter 10
Unlocking Housing Equity in Japan 111
Implementation in the Japanese Context 112
Feasibility of Reverse Mortgages in Japan 117
Summary 121
Notes 124
Chapter 11
The Secondary Market in Home Equity Conversion Mortgages 127
The Reverse Mortgage to Liquidate Home Equity 127
HECM: A Financial Innovation 130
Cash Flows, Risk, and Uncertainty 131
The Secondary Market for HECM 132
HECM Securitization 134
Longevity Risk Embedded in HECM 137
The Constraints of the Underlying Asset 140
Concluding Remarks 145
Summary 146
Appendix a Housing Wealth Among the Elderly 149
Wealth in Housing 149
Owner-Occupancy Rates 152
How Risky Is Housing Wealth? 153
Do the Elderly Decumulate Their Housing Wealth? 155
Notes 159
Appendix B Reverse Mortgage Analytics 161
Determining the Payout Values: Practical Considerations 162
Computing Payout Values: An Example 163
Notes 165
Glossary 167
About the Author 171
About the Contributors 173
Index 181

About the author

VISHAAL B. BHUYAN has been involved in the "life markets" for over five years and has focused on analyzing and investing in life settlements, reverse mortgages, and other linked assets. He has advised a number of large investment funds on the longevity and mortality risk asset class and has been invited to speak at various investment and industry-specific conferences across the United States, Europe, and Asia. Bhuyan is also the editor and coauthor of Life Markets: Trading Mortality and Longevity Risk with Life Settlements and Linked Securities (Wiley) and will be releasing The Esoteric Investor (FT Press) in 2011.

Product details

• Authors: Vishaal B Bhuyan, Vishaal B. Bhuyan, BHUYAN VISHAAL B
• Publisher: Wiley, John and Sons Ltd
• Languages: English
• Product format: Hardback
• Released: 24.12.2010
• EAN: 9780470584620
• ISBN: 978-0-470-58462-0
• No. of pages: 188
• Series: Wiley Finance; Wiley Finance Editions; The Wiley Finance Series; Wiley Finance; Wiley Finance Editions
• Subjects: Social sciences, law, business > Business > Business administration; Finance & Investments, Finanz- u. Anlagewesen, Institutionelle Finanzplanung, Institutional & Corporate Finance