HMBS: A Year of Transition 

Reverse mortgage-backed securities spreads tightened into the end of January after an expected and dramatic year-end widening. The lower-volume landscape is dominated by the HECM 60 product, which is what originators are calling the new program loans. Fully drawn fixed-rate HMBS have traded as tight as 80 to swaps and as wide as 100 to swaps for 30- to 45-day settlement.Given the principal limit factor reduction, the average life extends out to seven years at 100 percent of the HECM prepayment curve and trades at a low to mid-3 percent yield to the investor base. Fixed rate issuance has been