System and method for evaluating future collateral risk quality of real estate
First Claim
1. A computer-assisted process for evaluating risks associated with real property, comprising the steps of, in a general-purpose computer:
- (1) determining a probability of negative equity for the real property as a function of a future mortgage value and a future predicted value for the real property;
(2) establishing a base score for the real property for each of a plurality of future years as a function of the probability of negative equity determined in step (1); and
(3) generating a risk score indicative of future risk associated with the real property as a function of the base score established for each of the plurality of future years.
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Accused Products
Abstract
An apparatus and method is provided for evaluating default and foreclosure loss risk, both at time zero and for several years into the future, associated with a piece of real property on the basis of factors such as statistical home price trend information for a metropolitan statistical area (MSA) in which the real property is located and loan terms. An automated valuation estimate for the property is obtained and compared to the purchase price. A loan-to-value ratio is determined based on automated valuation estimate. A future home price is predicted based on statistical data obtained for a metropolitan statistical area (MSA) in which the real property is located. Based on the future home price and the LTV ratio, a probability that the real property will have negative equity is determined, and a risk score is generated based on the probability. Other features include generating base scores for each of a plurality of future years and obtaining a weighted average of the base scores; adjusting the risk score based on liquidity of real property values for the MSA in which the real property is located; adjusting the risk score based on reliability of data for the real property; adjusting the risk score based on price volatility for the MSA in which the real property is located; and using unemployment data in the MSA for which the real property is located in calculating the risk score.
210 Citations
32 Claims
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1. A computer-assisted process for evaluating risks associated with real property, comprising the steps of, in a general-purpose computer:
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(1) determining a probability of negative equity for the real property as a function of a future mortgage value and a future predicted value for the real property;
(2) establishing a base score for the real property for each of a plurality of future years as a function of the probability of negative equity determined in step (1); and
(3) generating a risk score indicative of future risk associated with the real property as a function of the base score established for each of the plurality of future years. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18)
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19. A computer-assisted process for evaluating real property, comprising the steps of, in a general-purpose computer:
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(1) establishing an automated valuation estimate for the real property;
(2) predicting a future price for the real property based on statistical data pertinent to an area in which the real property is located;
(3) determining, based on steps (1) and (2), a probability that the real property will have a negative equity in a future time period; and
(4) generating a risk score for the real property using the probability determined in step (3). - View Dependent Claims (20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31)
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32. A computer-implemented process for evaluating risks associated with real property, comprising the steps of, in a general-purpose computer:
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(1) generating a plurality of automated valuation estimates for the real property;
(2) weighting each of the plurality of automated valuation (AVM) price estimates according to regression coefficients reflecting data for a submarket in which the real property is located, and generating a weighted AVM price estimate for a current year;
(3) generating a predicted future price for each of a plurality of future years for the real property using a regression model that takes into account local economic conditions in a submarket in which the real property is located;
(4) determining for each of the plurality of future years a probability that the real property will have a negative equity on the basis of the predicted future price;
a mortgage balance for each future year; and
a variance of prices for the submarket in which the real property is located;
(5) generating a risk score for the real property using the probability determined in step (4); and
(6) adjusting the risk score to account for liquidity in the submarket.
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Specification