Method and system for reverse mortgage replication using remainder interests

• US 20090106142A1
• Filed: 10/08/2008
• Published: 04/23/2009
• Est. Priority Date: 10/23/2007
• Status: Active Grant

• Current Assignee: Guggenheim Partners LLC (United Kingdom) (Guggenheim Partners LLC)
• Original Assignee: Guggenheim Partners LLC (United Kingdom) (Guggenheim Partners LLC)
• Inventors: Lewis, Jeffrey, Lange, Jeffrey
• Granted Patent: US 8,489,484 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• 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

Methods for providing remainder interests with protection to a seller and mitigation of the potential consequences suffered by related financial instruments. The protected remainder interest financial instrument includes submitting a seller to underwriting to accurately determine the seller'"'"'s remaining life expectancy, and purchasing the protected remainder interest of an illiquid asset from the seller leaving the seller with a life estate. The method includes a client system for displaying information related to the transaction and inputting information related to the seller, illiquid asset, and the buyer. The client system is used to create a request to create the protected remainder interest. A server system accepts the request, stores the information in memory, and creates the protected remainder interest. The server system includes software for linking seller and buyers of protected remainder interests, which include terms of the protected remainder interest such as contingent sale or contingent purchase schedules.

Claims

1. A method for providing a protected remainder interest financial instrument, the method comprising the steps of:

submitting a seller to underwriting to accurately determine the seller'"'"'s remaining life expectancy; and

purchasing the protected remainder interest of an illiquid asset from the seller leaving the seller with a life estate.

2. The method of claim 1 wherein the step of purchasing further comprises the step of:

providing the seller the ability to sell the entire protected remainder interest currently or defer selling a portion of or all of the protected remainder interest at pre-specified terms provided by a buyer of the protected remainder interest.

3. The method of claim 1 wherein the step of purchasing further comprises the step of:

providing the seller with a right for a number of years to repurchase the protected remainder interest at pre-specified price from the buyer of the protected remainder interest under certain conditions.

4. The method of claim 3 wherein the seller is an owner of the illiquid asset and the certain conditions include death of the owner.

5. The method of claim 3 wherein the seller is an owner of the illiquid asset and the illiquid asset is a home and the certain conditions include the owner moving from the home.

6. The method of claim 1 wherein the step of purchasing further comprises the step of:

a buyer of the protected remainder interest providing a contingent sale schedule that lists the dates, amounts, and prices at which the seller can repurchase the protected remainder interest in the event the seller desires to move and sell the illiquid asset or the seller'"'"'s estate desires to recapture the illiquid asset equity by selling the illiquid asset.

7. The method of claim 1 wherein the step of purchasing further comprises the step of:

a buyer of the protected remainder interest providing a contingent purchase schedule that provides the dates, amounts, and prices at which the buyer will purchase future sales of portions of the protected remainder interest should the seller not desire to sell his entire remainder interest at the creation of the financial instrument.

8. The method of claim 1 wherein the step of purchasing further comprises the step of:

a buyer of the protected remainder interest providing a contingent sale schedule that lists the dates, amounts, and prices at which the seller can repurchase the protected remainder interest in the event of the seller'"'"'s death or in the event the seller needs long term care.

9. The method of claim 1 wherein the step of purchasing further comprises the step of:

a buyer of the protected remainder interest providing a continent purchase schedule that provides the dates, amounts, and prices at which the buyer will purchase future sales of portions of the protected remainder interest in the event of the seller'"'"'s death or in the event the seller needs long term care.

10. A system for providing a protected remainder interest financial instrument comprising a computer configured to:

submit information related to a seller to an underwriting routine to accurately determine the seller'"'"'s remaining life expectancy; and

based on the seller'"'"'s remaining life expectancy, purchase for a buyer the protected remainder interest of an illiquid asset from the seller leaving the seller with a life estate.