Method and apparatus for monitoring the collateral risk analysis for commodity lenders

• US 20050149433A1
• Filed: 10/25/2004
• Published: 07/07/2005
• Est. Priority Date: 10/23/2003
• Status: Active Grant

• Current Assignee: Robert E. Rothstein
• Original Assignee: Robert E. Rothstein
• Inventors: Rothstein, Robert E.
• Granted Patent: US 7,707,102 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

The risk of loss in individual collateral loans may be evaluated by taking into consideration the market supply and demand for the collateral/asset, as well as the amount of the loan balance in proportion to the value of the collateral. A Collateral Risk Index is determined using information regarding the total number of sales of the collateral/asset, the total number of pending listings, the total number of active listings, and the total number of expired listings in a time period. This information is used in conjunction with the loan balance versus the collateral/asset value to determine an index reflective of the risk of loss to the lender or investor.

Claims

1. A method of determining risk index for a collateral loan made on a commodity/asset, comprising the steps of:

(a) using computing means having a central processing unit to gather from one or more data sources a total number of closed sales, S_c, in a particular commodity market in said period;

(b) using said computing means to gather from one or more data sources a total number of sales which are pending, S_p, in said particular commodity market in said period;

(c) using said computing means to gather from one or more data sources a total number of expired listings, L_e, in said particular commodity market in said period;

(d) using said computing means to gather from one or more data sources a total number of active listings L_a, in said particular commodity market in said period;

(e) determining a market index, M_i, indicative of the strength of said particular commodity market over a period consisting of a length of days, P_d, in accordance with

$M_i=\frac{{\left(S_p+S_c\right)}^2}{P_d<br><br>L_a<br><br>\left(S_c+S_p+L_e\right)};<br><br>$

(f) determining the proportion of the loan balance, B, to the value of the commodity, V;

(g) determining the collateral risk index, CR_i by dividing the market index, M_i, by the loan balance proportion, P; and

(h) determining if action is required on the collateral loans by a certain Collateral Risk Index range to reduce the risk of loss, and if so, what action.

2. The method of claim 1, including the step of repeating steps (a) through (h) for a plurality of loans, and graphically representing the calculated collateral risk index.

3. The method of claim 2, wherein the commodity is composed of real estate and said data sources are a multi-listing service (MLS) database.

4. The method of claim 2, wherein the commodity is composed of boats.

5. The method of claim 2, wherein the commodity is composed of airplanes.

6. The method of claim 2, wherein the commodity is composed of medical equipment.

7. The method of claim 2, wherein the commodity is composed of manufacturing equipment.

8. The method of claim 2, wherein the commodity is composed of automobiles.

10. The method of claim 8, including the step of repeating steps (a) through (i) for a plurality of said periods, and graphically representing the calculated collateral risk index.

11. The method of claim 8, wherein the commodity is selected from a group consisting of real estate, boats, airplanes, automobiles, medical equipment, and manufacturing equipment.

9. A method of determining the risk of loss on loans for commodities in a lender'"'"'s or investor'"'"'s portfolio, comprising the steps of:

(a) using computing means having a central processing unit to gather from data sources;

the total number of closed sales in said period, S_c;

the number of sales pending in said period, S_p;

the number of listings which have expired in said period, L_e;

the number of commodities actively listed, L_a, at the end of said period;

the balance due on a particular loan; and

the value of the commodity for such loan;

(b) calculating a total number of listed commodities in said particular commodity market, T, in accordance with the equation;

T_l=S_c+S₄+L_e;

(c) determining the total number of successfully marketed commodities, T_s in accordance with the equation;

T_s=S_c+S_p;

(d) determining a demand index, D, as being T_s divided by T_l;

(e) calculating a rate of absorption, R_a, as being T_s divided by a length of days, P_d to be monitored;

(f) calculating a supply level, S_i, as a ratio of L_a divided by R_a;

(g) calculating a market index M_i indicative of the strength of the particular commodity market over P_d, as the ratio of D divided by S_l;

(h) for a specific loan calculating the proportion, P, of the value of the commodity, V, represented by the loan balance, B;

(i) calculating a collateral risk index CRi by dividing the market index M_i by the proportion, P; and

(j) evaluating if any remedial action is required with respect to specific commodity loans of a collateral risk index of a certain range, and if so, the nature of the action.

12. An apparatus for calculating a collateral risk index, CR_i, determinative of the risk of loss with respect to a loan for a commodity, comprising:

(a) means for interfacing with one or more databases to gather;

the total number of closed sales, S_c, in a commodity market in a specified period, S_i;

the total number of sales which are pending, S_p, in said market in said period;

the total number of expired listings, L_e, in said market in said period;

the total number of active listings, L_a, in said market in said period;

the balance, B, due on a specific loan; and

, the value, V, of the corresponding commodity;

(b) computing means receiving from said means for interfacing said S_c, S_p, L_e, L_a, B, and V parameters and generating the collateral risk index, CR_i, said collateral risk index, CR_i, taking into account the strength of the particular commodity market over a period consisting of a length of days, P_d, said computing means calculating said collateral risk index, CR_i, in accordance with

${\mathrm{CR}}_i=\frac{{V<br><br>\left(S_p+\mathrm{Sc}\right)}^2}{{\mathrm{BP}}_d<br><br>L_a<br><br>\left(S_c+S_p+L_e\right)}$

13. The apparatus of claim 12, wherein the commodity is selected from the group consisting of real estate, boats, airplanes, medical equipment, and manufacturing equipment.