Method and apparatus for rating asset-backed securities
First Claim
1. A method of reducing a cost of borrowing of a lender when the lender issues asset-backed securities (ABS) backed by receivables from loans to borrowers, comprising:
- (a) electronically modeling consumer spending patterns using individual and aggregate consumer data, including tradeline data, internal customer data, and consumer panel data;
(b) electronically estimating a spend capacity of each borrower of a loan based on tradeline data of the borrower, balance transfers of the borrower, and the model of consumer spending patterns;
(c) for each borrower, using the spend capacity as a factor in determining loan amounts to reduce a risk of default; and
(d) applying for an ABS rating in a capital market based on the reduced risk of default of each borrower.
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Accused Products
Abstract
Share of Wallet (“SOW”) is a modeling approach that utilizes various data sources to provide outputs that describe a consumer'"'"'s spending capability, tradeline history including balance transfers, and balance information. These outputs can be appended to data profiles of customers and prospects and can be utilized to support decisions involving prospecting, new applicant evaluation, and customer management across the lifecycle. The likelihood of default determined by the SOW model, when applied to a loan portfolio, can reduce the amount of credit enhancement required for an asset-backed securities rating.
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Citations
30 Claims
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1. A method of reducing a cost of borrowing of a lender when the lender issues asset-backed securities (ABS) backed by receivables from loans to borrowers, comprising:
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(a) electronically modeling consumer spending patterns using individual and aggregate consumer data, including tradeline data, internal customer data, and consumer panel data; (b) electronically estimating a spend capacity of each borrower of a loan based on tradeline data of the borrower, balance transfers of the borrower, and the model of consumer spending patterns; (c) for each borrower, using the spend capacity as a factor in determining loan amounts to reduce a risk of default; and (d) applying for an ABS rating in a capital market based on the reduced risk of default of each borrower. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9, 10)
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11. An apparatus for managing asset-backed securities (ABS) based on loans to borrowers, comprising:
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a processor; and a memory in communication with the processor, wherein the memory stores a plurality of processing instructions for directing the processor to; model consumer spending patterns using individual and aggregate consumer data, including tradeline data, internal customer data, and consumer spend panel data; estimate a spend capacity of each borrower of a loan based on tradeline data of the borrower, balance transfers of the borrower, and the model of consumer spending patterns; for each borrower, use the spend capacity as a factor in determining loan amounts to reduce a risk of default; and output the reduced risk of default, wherein the output is used to obtain an ABS rating. - View Dependent Claims (12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25)
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26. A computer program product for managing asset-backed securities (ABS) based on loans to borrowers, said computer program product having computer program code embodied in computer-readable medium, said computer program code comprising:
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first computer readable program code which causes a computer to model consumer spending patterns using individual and aggregate consumer data, including tradeline data, internal customer data, and consumer panel data; second computer readable program code which causes a computer to estimate a spend capacity of each borrower of a loan based on tradeline data of the borrower, balance transfers of the borrower, and the model of consumer spending patterns; third computer readable program code which causes a computer to use the spend capacity as a factor in determining loans for which the risk of default is reduced; and fourth computer readable program code which causes a computer to output the reduced risk of default, wherein the output is used to obtain an ABS rating. - View Dependent Claims (27, 28, 29, 30)
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Specification