SHARED APPRECIATION LOAN MODIFICATION SYSTEM AND METHOD

• US 20100179904A1
• Filed: 01/08/2010
• Published: 07/15/2010
• Est. Priority Date: 01/09/2009
• Status: Active Grant

• Current Assignee: Bank of America Corp.
• Original Assignee: Bank of America Corp.
• Inventors: Shields, Randy, Fail, Peter, Cicero, Allison, Marshall, Edna, Morano, Thomas, O'Rorke, Kenneth
• Granted Patent: US 8,543,494 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• 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

Embodiments of the present invention provide systems, methods, and computer program products for modifying the terms of a loan and for providing for a shared appreciation loan program. For example, in one embodiment the amount owed on an existing HELOC is split into two portions. A qualifying borrower can defer the obligation to pay interest and payments on a portion of the HELOC in exchange for sharing up to 50% of the future appreciation in the real property that serves as the underlying security for the HELOC. This mortgage plan can provide an incentive for the borrower to remain in the home since the borrower may be able to share in the appreciation of the home even if the home never appreciates beyond the full amount owed on the home, while at the same time preserving the borrower'"'"'s credit rating and reducing the borrower'"'"'s monthly payment. The bank may benefit from the mortgage plan by both reducing and deferring losses.

Claims

1. A loan modification system comprising:

a memory system comprising information stored therein about a loan on a residence, wherein the loan comprises a principal balance and payment terms; and

a processing system operatively coupled to the memory system and configured calculate a modified loan payment schedule for a customer based on a loan modification plan and store the modified loan payment schedule in the memory system, wherein the loan modification plan comprises;

dividing the loan balance into a first loan portion and a second loan portion, wherein the first loan portion is subject to payment terms of the loan, and wherein payment on the second loan portion is deferred; and

providing, at termination of the loan modification plan, a mortgagee with a portion of appreciation that occurs in the value of the residence during a time period beginning with a first time proximate establishment of the loan modification plan and a second time proximate termination of the loan modification plan.

2. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to put the customer in default or the customer is already in default.

3. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater than the value of the residence before entering the loan modification plan.

4. The loan modification system of claim 3, wherein the ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

5. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer meets a sufficient minimum credit score.

6. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer has the ability to make payments on the loan.

7. The loan modification system of claim 1, wherein the processing system is further configured to allow a user to input requirements to determine the eligibility of the customer for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

8. The loan modification system of claim 7, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

9. The loan modification system of claim 1, wherein the second loan potion is not greater than fifty percent of the loan.

10. The loan modification system of claim 1, wherein the percentage of the appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

11. The loan modification system of claim 1, wherein the loan modification plan further comprises that the customer elects to pay the mortgagee the lesser amount of the either a percentage of the appreciation in the value of the residence or the second loan portion of the loan.

12. The loan modification system of claim 1, wherein the loan modification plan further comprises that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

13. The loan modification system of claim 1, wherein the loan modification plan further comprises that if the customer defaults on any loan associated with the residence, then the customer owes the mortgagee both the first portion and the section portion of the loan subject to the payment terms of the loan.

14. A method for a loan modification plan, the method comprising:

receiving, through the use of a processor, the terms of a loan modification plan, wherein the terms comprise;

a first loan portion of an existing loan on a residence, the first loan portion subject to original terms of the existing loan;

a second loan portion of the existing loan, wherein payments are deferred on the second loan portion; and

an obligation to share with a mortgagee a percentage of future appreciation in value of the residence;

calculating, through the use of the processor, the loan modification plan payment schedule; and

storing, through the use of the memory device, the terms and the payment schedule of the loan modification plan.

15. The method of claim 14, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to put the customer in default or the customer is already in default.

16. The method of claim 14, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater then the value of the residence before entering the loan modification plan.

17. The method of claim 16, wherein the ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

18. The method of claim 14, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer meets a sufficient minimum credit score.

19. The method of claim 14, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has the ability to make payments on the loan, but is unwilling to do so.

20. The method of claim 14, further comprising:

receiving, through the use of a processor, customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

21. The method of claim 20, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

22. The method of claim 14, wherein the second potion of the loan is not greater than fifty percent of the loan.

23. The method of claim 14, wherein the percentage of the appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

24. The method of claim 14, wherein the terms of the loan modification plan further comprise that the customer elects to pay the mortgagee the lesser amount of the either the percentage of the appreciation in the value of the residence or the second loan portion of the loan.

25. The method of claim 14, wherein the terms of the loan modification plan further comprise that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

26. A computer program product comprising a computer-readable medium having computer-readable program code portions embodied therein, the computer-readable program code portions comprising:

a first executable portion configured for receiving the terms of a loan modification plan, wherein the terms comprise;

a first loan portion of an existing loan on a residence, the first loan portion subject to original terms of the existing loan;

a second loan portion of the existing loan, wherein payments are deferred on the second loan portion; and

an obligation to share with a mortgagee a percentage of future appreciation in value of the residence;

a second executable portion configured for calculating the loan modification plan payment schedule; and

a third executable portion configured for storing the terms and the payment schedule of the loan modification plan.

27. The computer program product of claim 26, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has acted in a way that will allow the mortgagee to put the customer in default or the customer is already in default.

28. The computer program product of claim 26, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s total outstanding loans on a residence are greater then the value of the residence before entering the loan modification plan.

29. The computer program product of claim 28, wherein the ratio of the customer'"'"'s total outstanding loans on a residence to the value of the residence before entering the loan modification plan is greater than one-hundred and ten percent.

30. The computer program product of claim 26, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer meets a sufficient minimum credit score.

31. The computer program product of claim 26, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer has the ability to make payments on the loan, but is unwilling to do so.

32. The computer program product of claim 26, further comprising:

an executable portion configured for receiving customer eligibility requirements for the loan modification plan, wherein the requirements comprise that the customer'"'"'s loan-to-value ratio will meet a targeted ratio or range of ratios after entering the loan modification plan.

33. The computer program product of claim 32, wherein the customer'"'"'s loan-to-value ratio is equal to one-hundred and ten percent after entering the loan modification plan.

34. The computer program product of claim 33, wherein the second potion of the loan is not greater than fifty percent of the loan.

35. The computer program product of claim 26, wherein the percentage of the appreciation in the value of the residence that the mortgagee is entitled to is fifty percent of the difference between the value of the residence at the time of termination minus the value of the residence at the time when the customer entered into the loan modification plan.

36. The computer program product of claim 26, wherein the terms of the loan modification plan further comprise that the customer elects to pay the mortgagee the lesser amount of the either the percentage of the appreciation in the value of the residence or the second loan portion of the loan.

37. The computer program product of claim 26, wherein the terms of the loan modification plan further comprise that the mortgagee determines the value of the residence when the loan modification plan is entered into by the customer and when termination of the loan modification plan occurs under the same valuation process.

38. The computer program product of claim 26, wherein the terms of the loan modification plan further comprise that if the customer defaults on any loan associated with the residence the customer owes the mortgagee both the first portion and the section portion of the loan subject to the original terms of the loan.

39. An apparatus comprising:

a memory device comprising loan information and loan modification assumptions stored therein, wherein the loan information comprises a current loan balance associated with a loan and a current collateral value associated with the loan, and wherein the loan modification assumptions comprise a target loan-to-value ratio; and

a processing device configured to determine a loan modification plan available for the loan based on the information stored in the memory device by deferring enough of the current loan balance to obtain the target loan-to-value ratio and by recording an obligation to share appreciation in the value of the collateral from the current collateral value.

40. The apparatus of claim 39, wherein the collateral comprises real property, wherein the loan comprises a home equity line of credit (HELOC) or a second mortgage, wherein the loan information further includes a first mortgage balance, wherein the target loan-to-value ratio is a cumulative loan-to-value ratio, and wherein the processor is configured to defer enough of the current loan balance to obtain the target loan-to-value ratio by separating the HELOC or the second mortgage into a first loan portion and a second loan portion such that the sum of the first loan portion and the first mortgage balance, divided by the current collateral value, is equal to the target cumulative loan-to-value ratio.

41. The apparatus of claim 40, wherein the first loan portion is subject to original payment terms of the HELOC or second mortgage, and wherein payment of the second loan portion is deferred.