RISKSPAN VINTAGE QUALITY INDEX
RiskSpan’s Vintage Quality Index (VQI) measures the relative “tightness” of the mortgage underwriting environment over time. The VQI is based on the concept of risk layering, which takes into account the compounding effects of adding risky attributes to a loan. The lower the VQI, the tighter the underwriting environment. The VQI’s reference point (at which the index equals 100) is January 2003. Higher credit scores and lower debt-to-income and loan-to-value ratios relative to this reference point push the VQI lower. Lower credit scores higher DTIs and LTVs push it higher.
Analysts apply the VQI as an empirically-grounded way to control for the impact underwriting has on loan performance within RiskSpan’s residential mortgage credit model. For a more detailed explanation of the VQI, click here.
NRMLA/RiskSpan Reverse Mortgage Market Index
The Reverse Mortgage Market Index (RMMI) measures how much equity U.S. homeowners aged 62 and older cumulatively hold in their homes. RiskSpan computes this on a quarterly basis for the National Reverse Mortgage Lenders Association (NRMLA). The RMMI is computed by subtracting the cumulative amount of mortgage debt held by senior homeowners from the current value of their homes. The resulting difference—senior equity—is indexed against a March 2000 “base” observation, when senior equity measured $2.38 trillion.
The index is a valuable tool for reverse mortgage lenders and policymakers seeking to understand the collective housing and financial position of U.S. seniors.