INDEX-BASED LIQUIDITY SYSTEM AND METHOD

• US 20080288418A1
• Filed: 05/05/2008
• Published: 11/20/2008
• Est. Priority Date: 03/07/2003
• Status: Active Grant

• Current Assignee: Hippo Exchange, LLC
• Original Assignee: Market Shield Capital, LLC
• Inventors: Weiss, Allan N., Gordon, Neil R.
• Granted Patent: US 8,468,079 B2
• Time in Patent Office: Days
• US Class Current: 705/36R
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

A system and method for creating liquidity relative to one or more small businesses or assets provides liquidity to the small business or asset holder in return for a payment stream that comprises at least one payment that is adjustable relative to at least one relevant index.

Claims

1. A method of creating liquidity in at least one asset, the method comprising one or more computer implemented process and comprising:

establishing a current market value for the at least one asset;

defining an index having at least one component related to a market to which the at least one asset belongs;

providing liquidity from a lender to a holder of the at least one asset;

defining a payment stream, the payment stream having one or more payments from the holder to the lender; and

adjusting the payment stream as a function of the index, including;

if there is an increase in the index, adjusting the at least one payment in a first direction; and

if there is a decrease in the index, adjusting the at least one payment in a second direction opposite the first direction.

2. The method of claim 1 wherein the payment stream includes one or more payments having a fixed portion and an adjustable portion.

3. The method of claim 1 wherein the payment stream includes one or more payments having a principal portion and an interest portion used to define a payment amount, and adjusting the payment stream includes adjusting the payment amount by applying an index-based adjustment factor to the payment amount.

4. The method of claim 1 wherein the index represents values or prices of comparable assets in the same or a comparable market.

5. The method of claim 1 wherein the at least one asset includes real estate assets and the holder is a real estate investment trust (REIT), a fund, a corporate entity or a small business.

6. The method of claim 5 wherein the real assets include at least one commercial real estate property.

7. The method of claim 1 wherein the method further comprises creating a fund representing the at least one asset and defining shares representing claims against the fund.

8. The method of claim 1 further comprising defining a term and adjusting a final payment in the payment stream at the end of the term.

9. The method of claim 1 further comprising determining the index by predicting a future market value of the at least one asset using market-based trend data.

10. The method of claim 9 wherein predicting the future market value includes projecting the current value based on the market-based trend data to at least one point in time.

11. The method of claim 10 wherein the future market value is established by at least one of:

i) weighting the current market value using the market-based trend data; and

ii) weighting the current market value using an economic indicator.

12. A method for providing liquidity in a small business, the method comprising one or more computer implemented process and comprising:

defining a fund representing a financial stake in a real estate small business;

determining an initial payout by the fund to the real estate small business;

defining at least one index related to real estate;

defining a future payment stream to be made by the real estate small business to the fund corresponding to the initial payout; and

adjusting at least one payment in the future payment stream in response to a change in the index.

13. The method of claim 12, wherein the real estate is commercial real estate, the real estate small business is an owner of the commercial real estate, and the index is derived, at least in part, from commercial real estate rental rates.

14. The method of claim 13, wherein the commercial real estate rentals rates are determined for a specific geographic area.

15. The method of claim 12, wherein the real estate is residential real estate, the real estate small business is an owner of the residential real estate, and the index is derived, at least in part, from residential real estate property values.

16. The method of claim 15, wherein the residential real estate property values are determined for a specific geographic area.

17. The method of claim 15, wherein the residential real estate property values are determined for a specific type of real estate property.

18. The method of claim 15, wherein the residential real estate property values are determined for a specific size of real estate property.

19. The method of claim 15, wherein the residential real estate property values are determined for a specific class of real estate property.

20. The method of claim 12, wherein the real estate is commercial real estate, the real estate small business is an owner of the commercial real estate, and the index is derived, at least in part, from commercial real estate property values.

21. The method of claim 20, wherein the commercial real estate property values are determined for a specific geographic area.

22. The method of claim 20, wherein the commercial real estate property values are determined for a specific type of real estate property.

23. The method of claim 20, wherein the commercial real estate property values are determined for a specific size of real estate property.

24. The method of claim 20, wherein the commercial real estate property values are determined for a specific class of real estate property.

25. The method of claim 12, wherein the index is a composite index that includes one or more components not related to real estate.

26. The method of claim 12, wherein the index is a composite index that includes multiple components related to real estate.

27. The method of claim 12, wherein the index includes one or more components comprising or derived from earnings of the real estate owner.

28. The method of claim 12, wherein the fund further comprises at least one entity that is not a real estate small business.

29. The method of claim 12, wherein the payment stream includes a set of fixed payments and at least one adjustable payment.

30. The method of claim 12, wherein the payment stream represents a set of payment obligations to be determined at predetermined times during a term of the fund, the method further comprising:

identifying a set of fixed payments to be made by the small business to the fund at the predetermined times during the term; and

when a fixed payment and a payment obligation are determined at a predetermined time, determining a difference between the fixed payment and the payment obligation.

31. The method of claim 30, further comprising, when the fixed payment is greater than the payment obligation, applying the difference to a principal amount owed by the small business to the fund as part of the payment stream.

32. The method of claim 30, further comprising, when the fixed payment is greater than the payment obligation, banking the difference in an interest bearing account.

33. The method of claim 30, further comprising, when the fixed payment is less than the payment obligation, adding the difference to a principal amount owed by the small business to the fund as part of the payment stream.

34. The method of claim 12, wherein the fund is managed by a bank or other lender, or an agent or proxy therefore.

35. A method of determining a payoff of a loan, the method comprising one or more computer implemented process and comprising:

providing upfront liquidity to at least one small business;

defining a payment stream to be made by the small business corresponding to the upfront liquidity for a term;

defining at least one index related to a market value of the at least one small business;

adjusting at least one payment in the payment stream in response to a change in the index; and

in the case of payoff before the end of the term, determining a present value of future payments from the payment stream using the at least one index.

36. The method of claim 35 wherein determining the present value includes using one or more prior index levels applied to the payment stream and a discount rate to calculate the present value of the future payments that would have otherwise been made.

37. A method of providing liquidity with prepayment adjustments, the method comprising one or more computer implemented process and comprising:

providing upfront liquidity to a small business of a liquidity amount;

defining at least one index related to a market value of the small business;

defining a payment stream to be made by the small business for a term, the payment stream calculated for a principal amount that is greater than the liquidity amount;

at the end of the term, if the principal has not been prepaid and there is still an amount due, forgiving at least a portion of the amount due based on the index.

38. The method of claim 37 wherein forgiven amount includes forgiven principal.

39. The method of claim 37 wherein forgiven amount includes forgiven interest.