Method and apparatus for monitoring the collateral risk analysis commodity lenders

• US 7,707,102 B2
• Filed: 10/25/2004
• Issued: 04/27/2010
• Est. Priority Date: 10/23/2003
• Status: Expired due to Fees

• Current Assignee: Robert E. Rothstein
• Original Assignee: Robert E. Rothstein
• Inventors: Rothstein, Robert E.
• Primary Examiner(s): Kazimi, Hani
• Assistant Examiner(s): SEE, CAROL A
• Application Number:
  US10/973,951
• Publication Number:
  US 20050149433A1
• Time in Patent Office: 2,010 Days
• Field of Search: 705/4, 705/10, 705/38
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

The risk of loss in individual collateral loans may be evaluated by taking into consideration the market supply and demand for the collateral/asset, as well as the amount of the loan balance in proportion to the value of the collateral. A Collateral Risk Index is determined using information regarding the total number of sales of the collateral/asset, the total number of pending listings, the total number of active listings, and the total number of expired listings in a time period. This information is used in conjunction with the loan balance versus the collateral/asset value to determine an index reflective of the risk of loss to the lender or investor.

Claims

1. A method of determining a collateral risk index for a collateral loan made on a commodity, executed on a computing means having a central processing unit, the method comprising the steps of:

(a) using said computing means to gather from one or more data sources a total number of closed sales, S_c, in a particular commodity market in a predetermined period of time;

(b) using said computing means to gather from one or more data sources a total number of sales which are pending, S_p, in said particular commodity market in said predetermined period of time;

(c) using said computing means to gather from one or more data sources a total number of expired listings, L_e, in said particular commodity market in said predetermined period of time;

(d) using said computing means to gather from one or more data sources a total number of active listings L_a, in said particular commodity market in said predetermined period of time;

(e) determining, by said computing means, a market index, M_i, indicative of the strength of said particular commodity market over a period consisting of a length of days, P_d, in accordance with

2. The method of claim 1, including the step of repeating steps (a) through (h) for a plurality of loans, and graphically representing the calculated collateral risk index.

3. The method of claim 2, wherein the commodity is composed of real estate and said data sources are a multi-listing service (MLS) database.

4. The method of claim 2, wherein the commodity is composed of boats.

5. The method of claim 2, wherein the commodity is composed of airplanes.

6. The method of claim 2, wherein the commodity is composed of medical equipment.

7. The method of claim 2, wherein the commodity is composed of manufacturing equipment.

8. The method of claim 2, wherein the commodity is composed of automobiles.

10. The method of claim 8, including the step of repeating steps (a) through (i) for a plurality of said predetermined periods, and graphically representing the calculated collateral risk index.

11. The method of claim 8, wherein the commodity is selected from a group consisting of real estate, boats, airplanes, automobiles, medical equipment, and manufacturing equipment.

9. A method of determining a risk of loss on loans for commodities in a lender'"'"'s or investor'"'"'s portfolio, executed on a computing means having a central processing unit, the method comprising the steps of:

(a) using said computing means to gather from data sources;

the total number of closed sales in a predetermined period of time, S_c;

the number of sales pending in said predetermined period of time, S_p;

the number of listings which have expired in said predetermined period of time, L_e;

the number of commodities actively listed, L_a, at the end of said predetermined period of time;

the balance due on a particular loan; and

the value of the commodity for such loan;

(b) calculating, a total number of listed commodities in said particular commodity market, T_l, in accordance with the equation;

T_l=S_c+S_p+L_e;

(c) determining a total number of successfully marketed commodities, T_s in accordance with the equation;

T_s=S_c+S_p;

(d) determining a demand index, D, as being T_s divided by T_l;

(e) calculating a rate of absorption, R_a, as being T_s divided by a length of days, P_d to be monitored;

(f) calculating a supply level, S_i, as a ratio of L_a divided by R_a;

(g) calculating, by said computing means, a market index M_i indicative of the strength of the particular commodity market over P_d, as the ratio of D divided by S_i;

(h) for a specific loan, calculating a ratio, P, of a value of the commodity, V, represented by a loan balance, B;

(i) calculating a collateral risk index CRi by dividing the market index M_i by the ratio, P; and

(j) evaluating if any remedial action to reduce the risk of loss is required with respect to specific commodity loans in the collateral risk index and if it is determined that remedial action is required, determining a specific remedial action for the collateral loans wherein the specific remedial action is at least one action in a group of actions comprising monitoring the loan for signs of a default or selling the loan to a third party.

12. An apparatus for calculating a collateral risk index, CR_i, determinative of a risk of loss with respect to a loan for a commodity, comprising:

(a) means for interfacing with one or more databases to gather;

the total number of closed sales, S_c, in a commodity market in predetermined period of time;

the total number of sales which are pending, S_p, in said market in said predetermined period of time;

the total number of expired listings, L_e, in said market in said period of time;

the total number of active listings, L_a, in said market in said predetermined period of time;

the balance, B, due on a specific loan; and

, the value, V, of the commodity corresponding to the specific loan;

(b) computing means receiving from said means for interfacing said S_c, S_p, L_e, L_a, B, and V parameters and calculating the collateral risk index determinative of the risk of loss, CR_i, said collateral risk index, CR_i, taking into account the strength of the particular commodity market over a period of time consisting of a length of days, P_d said computing means calculating said collateral risk index, CR_i, in accordance with

13. The apparatus of claim 12, wherein the commodity is selected from the group consisting of real estate, boats, airplanes, medical equipment, and manufacturing equipment.