Making HECMs Trading More Transparent
February 28, 2025
The Home Equity Conversion Mortgage (HECM) market remains one of the smallest and least transparent segments of the Agency MBS market. A significant amount of critical information on HECM performance and features is not readily available in standard systems. This lack of transparency is concerning, especially as an aging population and growing home equity – now totaling $35 trillion in the U.S. (including $14 trillion for homeowners aged 62 and older) – make this financing option increasingly important.
Our goal is to bring greater transparency to this market by providing loan-level insights on all originated HECM loans. With this data, market participants can price and hedge HECM bonds more accurately, reducing the risks associated with owning these securities. As a result, HECM rates could become more competitive and affordable for borrowers.
Key HECM performance drivers missing from standard systems:
- HECM Product Type
- Draw Performance
- Incentive EAMIR (adjusted for HPA, borrower age, and market EAMIR, presented in mortgage-rate terms)
- Jumbo (adjusted for HPA)
Why these fields matter for bond performance & pricing is clear from the figures below:
- Fig 1 CPR by HECM Product Type
- Fig 2 Draw by HECM Product Type
- Fig 3 CPRs by Incentive EAMIR and HPA-Adjusted Jumbo
By improving access to granular HECM data, we can help create a more efficient and liquid market—benefiting both investors and borrowers alike.
If you would like us to run custom HECM reports for you, please let us know!
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Fig 1. CPR by HECM Product Type
Fig 2. Draw by HECM Product Type
Fig 3. CPRs by Incentive EAMIR and HPA Adjusted Jumbo
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