System and method for pricing loans in the secondary mortgage market

• US 20040225594A1
• Filed: 12/16/2003
• Published: 11/11/2004
• Est. Priority Date: 12/30/2002
• Status: Active Grant

• Current Assignee: Fannie Mae
• Original Assignee: Fannie Mae
• Inventors: Kemper, John L., Voth, David N., Nolan, William R. III, Kopperman, Peter G.
• Granted Patent: US 7,809,633 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/382 insuring higher security of transaction
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

A system is provided for generating pricing information regarding loans where each loan has loan level data and is associated with a borrower. The system includes a pricing engine for generating a price for each loan including an interest rate component and a credit risk component. The credit risk component is generated based on loan level data for the particular loan.

Claims

1. A system for generating pricing information regarding loans, each loan having loan level data and associated with a borrower, the system comprising a pricing engine for generating a price for each loan including an interest rate component and a credit risk component, the credit risk component being generated based on loan level data for the particular loan.

2. A system according to claim 1, wherein the pricing engine includes cash pricing logic for determining a purchase price for loans sold to a purchaser for cash.

3. A system according to claim 1, wherein the pricing engine includes financial asset pricing logic for determining a securitization price for the creation of a financial asset backed by the loans, the securitization price including an interest rate component and a credit risk component generated based on loan level data for each loan.

4. A system according to claim 3, wherein the securitization price includes a guarantee fee for guaranteeing timely payment of the loans that back the financial asset.

5. A system according to claim 1, wherein the loan level data includes characteristics of a loan and characteristics of the borrower associated with the loan.

6. A system according to claim 5, wherein the credit risk component is determined using the characteristics of the loan.

7. A system according to claim 6, wherein the credit risk component is determined further using the characteristics of the borrower.

8. A system according to claim 1, wherein the loan level data includes a loan type.

9. A system according to claim 8, wherein available values for the loan type include a new loan, a refinanced loan and a cashout refinanced loan.

10. A system according to claim 1, wherein the loan level data includes a property type.

11. A system according to claim 10, wherein available values for the property type include investment property and primary residence.

12. A system according to claim 1, further comprising commitment logic, coupled to the pricing logic, the commitment logic configured to permit the seller to enter into a commitment to sell the loans, wherein the commitment logic invokes the pricing logic to determine prices.

13. A system according to claim 1, further comprising deal management logic, coupled to the pricing logic, the deal management logic configured to track terms of deals for the sale of loans entered into with the seller, wherein the deal management logic invokes the pricing logic to determine prices.

14. A system according to claim 1, further comprising financial asset generation logic, coupled to the pricing logic, the financial asset generation logic for facilitating the creation and maintenance of a plurality of financial assets backed by the loans, wherein the financial asset generation logic invokes the pricing logic to determine a securitization price for the creation and maintenance of each financial asset.

15. A system according to claim 14, wherein the securitization price includes a guarantee fee for guaranteeing timely payment of the plurality of loans that back the financial asset.

16. A system according to claim 1, further comprising delivery logic, coupled to the pricing logic, the delivery logic for receiving and processing the loans bought from the seller, wherein the delivery logic invoke the pricing engine to determine a price for each loan.

17. A system according to claim 12, wherein the pricing logic and commitment logic are provided on a common integrated platform.

18. A system according to claim 13, wherein the pricing logic and deal management logic are provided on a common integrated platform.

19. A system according to claim 14, wherein the pricing logic and financial asset generation logic are provided on a common integrated platform.

20. A system according to claim 16, wherein the pricing logic and the delivery logic are provided on a common integrated platform.

21. A method for generating a purchase price for loans sold by a seller to a purchaser for cash in accordance with an agreement, the method comprising:

receiving a set of loan data for each loan from the seller; and

determining a purchase price for each loan including an interest rate component and a credit risk component, the credit risk component being generated based on the loan level data for the particular loan.

22. A method according to claim 21, wherein the loan level data includes characteristics of a loan and characteristics of a borrower associated with the loan.

23. A method according to claim 22, wherein the credit risk component is determined using the characteristics of the loan.

24. A method according to claim 23, wherein the credit risk component is determined further using the characteristics of the borrower.

25. A method according to claim 21, wherein the loan level data includes a loan type.

26. A method according to claim 25, wherein available values for the loan type include a new loan, a refinanced loan and a cashout refinanced loan.

27. A method according to claim 21, wherein the loan level data includes a property type.

28. A method according to claim 27, wherein available values for the property type include investment property or primary residence.

29. A method for generating a securitization price for creating a financial asset backed by loans provided by a seller to a purchaser in accordance with an agreement, the method comprising:

receiving a set of loan data for each loan from the seller; and

determining a securitization price for each financial asset including an interest rate component and a credit risk component, the credit risk component being generated based on the loan level data for the particular loan.

30. A method according to claim 29, wherein the loan level data includes characteristics of a loan and characteristics of the borrower associated with the loan.

31. A method according to claim 30, wherein the credit risk component is determined using the characteristics of the loan.

32. A method according to claim 31, wherein the credit risk component is determined further using the characteristics of the borrower.

33. A method according to claim 29, wherein the securitization price include a guarantee fee for guaranteeing timely payment of the plurality of loans that back the financial asset.

34. A method according to claim 29, wherein the loan level data includes a loan type.

35. A method according to claim 34, wherein available values for the loan type include a new loan, a refinanced loan and a cashout refinanced loan.

36. A method according to claim 29, wherein the loan level data includes a property type.

37. A method according to claim 36, wherein available values for the property type include investment property and primary residence.

38. A data processing system for processing loan information, comprising:

acquisition logic, the acquisition logic including logic configured to receive acquisition information pertaining to loan term, interest rate, principal owed and other loan level data for a plurality of loans;

reporting logic, the reporting logic including logic configured to receive payment information regarding borrower payments in connection with the plurality of loans, perform loan accounting in connection with the borrower payments, and generate accounting output, the payment information being received on an ongoing basis throughout at least a portion of a term of each of the plurality of loans;

financial asset generation logic, the financial asset generation logic including logic configured to facilitate creation and maintenance of a plurality of financial assets backed by a plurality of loans; and

a pricing engine configured to generate price information including an interest rate component and a credit risk component, the credit risk component being generated based on loan level data for a particular loan;

wherein the acquisition logic, the reporting logic, the financial asset generation logic and the pricing logic are provided on a common integrated data processing platform.