System and method of assigning residential home price volatility

A method for providing home value assurance (HVA), comprising:

• providing at least one custodial server configured to perform the steps:
• at an HVA contract initiation, a custodian who holds the trust account receives on behalf of an HVA contract owner a full-term, fully-funded contract premium payment corresponding to a value of the HVA contract owner's desired protection coverage;
• at the HVA contract initiation, a custodian who holds the trust account receives from an HVA note investor a fully-funded investor principal corresponding to the value of the HVA contract owner's desired protection coverage and other predefined parameters;
• after the HVA contract initiation, a custodian who holds the trust account provides to said HVA note investor predefined contractual payments;
• at HVA contract maturity, a custodian who holds the trust account provides to said HVA contract owner a value corresponding to a change according to the predefined contract parameters in one or more predetermined real estate indices;
• and
• at HVA contract maturity, provides to said HVA note investor a value corresponding to the change in one or more predetermined real estate indices.

A method for creating and trading a fully-funded home-value security contract for real estate property, comprising:

• one or more note investors selling a fully-funded home-value security contract to a contract owner who is seeking protection from a decrease in real estate value;
• a custodian holding in a trust account and disbursing funds between one or more contract owners and the one or more note investors, wherein fully-funded upfront premium payments come from the one or more contract note owners, either directly or indirectly;
• and
• an exchange marketplace trading the home-value security contracts.

A method for providing a real estate financial instrument, comprising the steps of:

• accessing at least one real estate index that provides one or more values of one or more real estate properties;
• establishing a real estate instrument having a first value at a first time and another value at a fixed expiration date of said real estate instrument;
• defining a cash-settled payout of said real estate instrument, based upon a change in the value of the index between the first time and the fixed maturity date;
• indentifying a seller of the real estate instrument;
• indentifying a buyer of the real estate instrument;
• marketing the real estate instrument to the seller and the buyer;
• selling the real estate instrument through a distribution channel;
• clearing and executing the transaction for the real estate instrument through a marketplace structure;
• and
• settling the real estate instrument by making the cash-settled payout to the buyer based upon any change that has occurred in at least one real estate index between two dates, the first of which is on or around the transaction issuance date, the second of which is on or around the transaction maturity date.