Systems and methods for residential real estate risk transference via asset-backed contract

A processor-implemented method for real estate risk transference via a contract associated with a first real estate property, the contract being an asset-backed index swap or an investment contract in which an owner entity of the first real estate property grants to an investor entity an economic right to a portion of future appreciation of the first real estate property in exchange for consideration, the contract expiring responsive to a transfer of title of the first real estate property, the method being performed by one or more processors configured to execute computer program instructions, the method comprising:

• determining, using one or more processors to execute a periodic-cash-settlement-value-projection module, future cash settlement values of expiry per period for a plurality of periods based on information received by the one or more processors, the received information including one or more of a term of the contract, an appreciation projection associated with the first real estate property, or a conditional prepayment rate vector;
• and
• determining, using one or more processors to execute a stochastic-partial-differential-equation-contract-valuation module, a probability of expiry per period for the plurality of periods, a given probability of expiry for a corresponding period being based on a probability of a transfer of title of the first real estate property during the corresponding period, transfer of title being effected by either a sale by the owner entity of the first real estate property or death of the owner entity;
• determining, using one or more processors to execute the stochastic-partial-differential-equation-contract-valuation module, a present value of the contract using a probabilistic model based on the future cash settlement values for periodic expiries, and the probabilities of expiry for corresponding periods;
• and
• outputting, using one or more processors, the present value of the contract for use by the investor entity as a basis for the consideration to obtain the economic right to the portion of future appreciation of the first real estate property.