METHODS AND SYSTEMS FOR PROACTIVE LOAN MODIFICATION

• US 20130166437A1
• Filed: 02/19/2013
• Published: 06/27/2013
• Est. Priority Date: 02/17/2009
• Status: Abandoned Application

• Current Assignee: HSBC Finance Corporation (HSBC Holdings plc)
• Original Assignee: HSBC Finance Corporation (HSBC Holdings plc)
• Inventors: MILES, Grant Fraser, TURNER, Shelley Christine, BAIR, Richard Michael, WITT, Roy Michael, SESTERHENN, Peter Allen, WANG, Manping, PENG, Jin, LOO, Yew-Young, SAYGINSOY, Ozgen, BEENE, Michael Andrew, MEHRA, Nikhil Nitin, REHMERT, Ian Jon
• Application Number:
  US13/770,009
• Publication Number:
  US 20130166437A1
• 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 40/06 Asset management; Financial planning or analysis

Abstract

Embodiments of the invention include a computer implemented method for automatically modifying the terms of a plurality of mortgages within a portfolio of mortgages, such that, monthly payments for the plurality of mortgages are reduced. The method includes calculating a current net present value for each of the mortgages in the portfolio of mortgages. The method also includes calculating a plurality of future net present values for each of the mortgages in the portfolio, each future net present value corresponding to one set of modified loan terms. The method also includes selecting the largest calculated future net present value. The method also includes automatically modifying the loan terms of each of the plurality of mortgages where the largest future net present value is greater than the current net present value. Loan terms are modified to correspond to the modified loan terms resulting in the largest net present value.

Claims

1. A computer implemented method, executed by a computer system having a computer processor, for automatically modifying the terms of a plurality of mortgages within a portfolio of mortgages, such that monthly payments for the plurality of mortgages are reduced, the method comprising:

calculating by the computer processor a current net present value for each of the mortgages in the portfolio of mortgages;

calculating by the computer processor a plurality of future net present values for each of the mortgages in the portfolio, each future net present value responsive to both a first period of time of the modification and a second period of time following expiration of the modification corresponding to one set of proposed modified loan terms comprising at least one of;

change of rate for a predetermined period of time, change of rate for the loan duration, forgoing at least one loan payment, reduction of the loan amount or change of type of loan;

determining by the computer processor the largest calculated future net present value for each of the mortgages in the portfolio; and

automatically generating by the computer processor the loan terms of each of the plurality of mortgages where the largest future net present value is greater than the current net present value, wherein the loan terms for each of the mortgages in the portfolio are modified to correspond to the proposed modified loan terms resulting in the largest net present value.

2. The method of claim 1, further comprising:

allowing by the computer processor a customer to opt-out of the automatic loan modification for a period of time.

3. The method of claim 2, wherein the period of time is 30 days.

4. The method of claim 1, further comprising:

after modifying the loan terms for a mortgage, notifying the borrower for the mortgage that the borrower'"'"'s loan terms have been modified and providing information on the modified loan terms, wherein the notification is provided through at least one of an email, a mailing, an automated phone call, and a live call.

5. The method of claim 1, further comprising:

retracting the modified loan terms in response to a mortgage customer'"'"'s failure to comply with the terms of their modified mortgage.

6. The method of claim 1, further comprising calculating by the computer processor a future net present value responsive to both the first period of time of the modification and the second period of time following expiration of the modification, by calculating the loss given default of the mortgage, the cost to the lender of the mortgage of the modified loan terms, and the probability of default given the modified loan terms, wherein the calculated future net present value is the current value of the mortgage, reduced by the product of the loss given default and the probability of default, and reduced by the cost to the lender of the modified loan terms.

7. The method of claim 6, further comprising using by the computer processor at least one of market, customer, and product risk factors in said calculating of the future net present value.

8. The method of claim 7, wherein a borrower is a-assigned to a risk category, and wherein the risk category is at least one of low, medium, and high.

9. The method of claim 8, wherein customer risk factors include at least one of credit score, income, payment history, other debt, and joint loan.

10. The method of claim 8, wherein the product risk factors include at least one of the type of loan, loan to value ratio, and lien position.

11. The method of claim 8, wherein the market risk factors include at least one of geographical location, housing price indexes, real disposable income per capita, unemployment rate, and industry loan to value ratio.

12. The method of claim 11, wherein the geographical area-is at least one of a county, state, and metropolitan division.

13. The method of claim 1, further comprising:

automatically performing by the computer processor a second modification to the loan terms of a mortgage within the portfolio of mortgages.

14. The method of claim 1, further comprising filtering by the computer processor mortgages in the portfolio of mortgages where the net benefit to the lender is greater than a threshold amount.

15. The method of claim 1, further comprising filtering by the computer processor mortgages where the net benefit to the lender is greater than a threshold amount.

16. The method of claim 1, further comprising filtering by the computer processor mortgages in the portfolio of mortgages where the borrower is delinquent with the loan terms of their current loan.

42. The method of claim 1, wherein the step of calculating by the computer processor a plurality of future net present values for each of the mortgages in the portfolio, further comprises:

simulating, by the computer processor, a plurality of treatment options for each of the mortgages in the portfolio, wherein each simulation accounts for at least one of probability of default, loss given default, at least one loan characteristic, and at least one financial variable, in creating a treatment option.

43. The method of claim 42, wherein each simulation outputs a net present value of expected future cash flow associated with each treatment option.

17. A computer implemented system for automatically modifying the terms of a plurality of mortgages within a portfolio of mortgages, such that, monthly payments for the plurality of mortgages are reduced, the system comprising:

a computer implemented server system, having at least one computer processor, for processing and calculating a current net present value for each of the mortgages in the portfolio of mortgages, wherein data on the mortgages is received from a database through a communication network;

the computer processor calculating a plurality of future net present values for each of the mortgages in the portfolio, each future net present value corresponding to one set of proposed modified loan terms comprising at least one of;

change of rate for a predetermined period of time, change of rate for the loan duration, forgoing at least one loan payment, reduction of the loan amount or change of type of loan;

the computer processor determining the largest calculated future net present value for each of the mortgages in the portfolio;

the computer processor automatically generating the loan terms of each of the plurality of mortgages where the largest future net present value is greater than the current net present value, wherein the loan terms for each of the mortgages in the portfolio are modified to correspond to the proposed modified loan terms resulting in the largest net present value responsive to at least one of a first period of time of the modification or a second period of time following expiration of the modification; and

the computer processor updating mortgage data in the database in accordance with the modified loan terms.

18. The system of claim 17, further comprising:

the computer processor allowing a customer to opt-out of the automatic loan modification for a period of time.

19. The system of claim 18, wherein the period of time is 30 days.

20. The system of claim 17, further comprising:

a communication device, enabling the notifying of a borrower for a mortgage that the borrower'"'"'s loan terms have been modified once the loan terms for the mortgage have been modified, and providing information on the modified loan terms, wherein the notification is provided through at least one of an email, a mailing, an automated phone call, and a live call.

21. The system of claim 17, further comprising:

retracting the modified loan terms in response to a mortgage customer'"'"'s failure to comply with the terms of their modified mortgage.

22. The system of claim 17, further comprising the computer processor calculating a future net present value by calculating the loss given default of the mortgage, the cost to the lender of the mortgage of the modified loan terms, and the probability of default given the modified loan terms, wherein the calculated future net present value is the current value of the mortgage, reduced by the product of the loss given default and the probability of default, and reduced by the cost to the lender of the modified loan terms.

23. The system of claim 22, wherein the computer processor further uses at least one of market, customer, and product risk factors in said calculating of the future net present value.

24. The system of claim 23, wherein the computer processor further assigns a borrower to a risk category, wherein the risk category is at least one of low, medium, and high.

25. The system of claim 24, wherein customer risk factors include at least one of credit score, income, payment history, other debt, and joint loan.

26. The system of claim 23, wherein the product risk factors include at least one of the type of loan, loan to value ratio, and lien position.

27. The system of claim 23, wherein the market risk factors can include at least one of geographical location, housing price indexes, real disposable income per capita, unemployment rate, and industry loan to value ratio.

28. The system of claim 27, wherein the geographical area comprises at least one of a county, state, and a metropolitan division.

29. The system of claim 17, further comprising:

the computer processor automatically performing a second modification to the loan terms of a mortgage within the portfolio of mortgages.

30. The system of claim 17, wherein the computer processor-filters mortgages in the portfolio of mortgages where the net benefit to the lender is greater than a threshold amount.

31. The system of claim 17, wherein the computer processor filters mortgages where the net benefit to the lender is greater than a threshold amount.

32. The system of claim 17, wherein the computer processor filters mortgages in the portfolio of mortgages where the borrower is delinquent with the loan terms of their current loan.

44. The system of claim 17, wherein the computer processor, in calculating the plurality of future net present values for each of the mortgages in the portfolio, is further configured to simulate a plurality of treatment options for each of the mortgages in the portfolio, each simulation accounting for at least one of probability of default, loss given default, at least one loan characteristic, and at least one financial variable, in creating a treatment option.

45. The system of claim 44, wherein each simulation outputs a net present value of expected future cash flow associated with each treatment option.

33. A computer implemented method, executed by a computer system having a computer processor, for automatically modifying the terms of a plurality of mortgages within a portfolio of mortgages, such that monthly payments for the plurality of mortgages are reduced, the method comprising:

determining by the computer processor a customer'"'"'s eligibility for a first loan modification using a first set of rules, wherein eligibility is based on at least the customer'"'"'s disposable income, expenses or debt;

determining by the computer processor the customer'"'"'s eligibility for a second loan modification using a second set of rules, wherein eligibility is based on the net present value of the loan, and wherein determining net present value comprises calculating a plurality of future net present values for the customer'"'"'s mortgage, each future net present value corresponding to one set of proposed modified loan terms comprising at least one of;

change of rate for a predetermined period of time, change of rate for the loan duration, forgoing at least one loan payment, reduction of the loan amount or change of type of loan;

determining by the computer processor whether at least one of the first and second loan modifications provide the payment relief to the customer; and

automatically generating by the computer processor the loan terms of the customer'"'"'s mortgage in accordance with the determined one of the first and second loan modifications responsive to predetermined criteria.

34. The method of claim 33, further comprising:

allowing the customer to opt-out of the automatic loan modification for a period of time.

35. The method of claim 33, further comprising selecting by the computer processor the one of the first and second loan modifications that provides the greatest monthly payment relief to the customer.

36. The method of claim 33, further comprising:

after the generating of the loan terms, modifying the loan terms for the customer'"'"'s mortgage, notifying the borrower for the mortgage that the borrower'"'"'s loan terms have been modified, and providing information on the modified loan terms, wherein the notification is provided through at least one of an email, a mailing, an automated phone call, and a live call.

37. The method of claim 36, further comprising:

retracting the modified loan terms in response to the customer'"'"'s failure to comply with the terms of the modified mortgage.

38. The method of claim 33, further comprising calculating by the computer processor a future net present value by calculating the loss given default of the mortgage, the cost to the lender of the mortgage of the modified loan terms, and the probability of default given the modified loan terms, wherein the calculated future net present value is the current value of the mortgage, reduced by the product of the loss given default and the probability of default, and reduced by the cost to the lender of the modified loan terms.

39. The method of claim 38, further comprising using by the computer processor at least one of market, customer, and product risk factors in calculating the future net present value.

40. The method of claim 39, wherein a borrower is assigned to a risk category, and wherein the risk category is at least one of low, medium, and high.

41. The method of claim 33, further comprising:

automatically performing by the computer processor a second modification to the loan terms of the customer'"'"'s mortgage.

46. The method of claim 33, wherein the step of calculating a plurality of future net present values for the customer'"'"'s mortgage comprises:

simulating, by the computer processor, a plurality of treatment options for the customer'"'"'s mortgage, wherein the simulation accounts for at least one of probability of default, loss given default, at least one loan characteristic, and at least one financial variable, in creating each treatment option.

47. The method of claim 46, wherein the simulation outputs a net present value of expected future cash flow associated with each treatment option.