Web-based loan auctions for individual borrowers and lenders

• US 7,873,569 B1
• Filed: 01/12/2006
• Issued: 01/18/2011
• Est. Priority Date: 01/12/2006
• Status: Expired due to Fees

• Current Assignee: Robert Cahn
• Original Assignee: Robert Cahn
• Inventors: Cahn, Robert
• Primary Examiner(s): Hamilton; Lalita M
• Application Number:
  US11/330,840
• Time in Patent Office: 1,832 Days
• Field of Search: 705/35, 705/37, 705/38
• 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
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

A web-based loan auction system is available to individual borrowers and individual lenders and is particularly well-suited for individual borrowers that cannot meet the standards of conventional lending institutions. The system is also attractive to potential lenders that desire to achieve a higher return on their investment than currently offered by banks. The potential borrower submits a web-based loan application to the auction system. Once the loan application information is verified (a function performed by the agency offering the auction service), the application is translated into an “anonymous” version, where the personal information of the borrower himself is replaced by “placeholders” known and controlled by the auction service. The “anonymized” version of the loan application is then posted on the auction'"'"'s web site for bidding by potential lenders.

Claims

1. A method of creating a loan agreement document by conducting a loan auction over the Internet between individual borrowers and individual lenders through a third party loan auction service provider transforming a loan application form into an executed loan agreement, the method comprising the steps of:

a) establishing a plurality of authenticated individual lenders, with each individual lender forming a web-based escrow account for bidding, the escrow held by the third party loan auction service provider;

b) preparing a web-based loan application for an individual borrower, including personal identifying information and financial information including desired loan amount, and including credit report information to create an original loan application document, the original loan application document stored within a first computer database controlled by the third party loan auction service provider;

c) anonymizing, within a computer controlled by the third party loan auction service provider, the web-based original loan application document by replacing the personal identifying information with placeholding information known and controlled by the third party loan auction service, the anonymized loan application document stored within a second computer database controlled by the third party loan auction service provider and linked to the original loan application document stored in the first computer database;

d) presenting the anonymized loan application on the third party loan auction service provider web site created by a computer controlled by the third party loan auction service provider for viewing by the plurality of authenticated individual lenders, as well as a set of digital signatures associated with the original documents;

e) creating a loan auction form on the computer controlled by the third party loan auction service provider, listing the placing holding information and financial information;

f) publishing the loan auction form on the third party loan auction service website for viewing by the plurality of authenticated individual lenders;

g) performing a loan auction for a predetermined period of time, wherein one or more lenders from the plurality of authenticated individual lenders offers any portion of the desired loan amount, at separate interest rates determined by the offering individual lenders by entering the offered portion, with identifying lender information, in the loan auction form;

h) closing the auction at a predetermined time, or when the complete loan amount has been taken by one or more authenticated individual lenders, each individual lender associated with a portion of the total loan amount;

i) sending the original loan application documents to the offering individual lenders for authentication against the digital signatures;

j) transforming within the computer controlled by the third party loan auction service provider, the original loan application document into;

     1) a single loan agreement between the individual borrower and the third party loan auction service provider and

     2) a plurality of loan agreements between the third party loan auction service provider and each offering individual lender from the plurality of authenticated individual lenders.

2. The method as defined in claim 1 wherein in performing step c), the personal identifying information is removed by the third party loan auction service provider and replaced with “

placeholder”

information that the third party loan auction service provider uses to correlate the anonymized loan application with the complete loan application.

3. The method as defined in claim 1 wherein the loan auction is performed for a predetermined period of time.

4. The method as defined in claim 1 wherein in performing step b) the third party loan auction service provider performs an initial clearance check on the information supplied by the borrower.

5. The method as defined in claim 1 wherein in performing step a), the method includes the steps of reviewing financial information for each potential individual lender, verifying the financial soundness of the potential individual lender, and creating an escrow account for each verified, authenticated individual lender with the third party loan auction service provider.

6. The method as defined in claim 1 wherein subsequent to performing step e), the method further includes the step of providing insurance to the authenticated individual lenders for an amount determined to cover legal costs of a default by the borrower.