Method and system for assessing repurchase risk

• US 7,885,892 B1
• Filed: 08/17/2010
• Issued: 02/08/2011
• Est. Priority Date: 11/08/2006
• Status: Active Grant

• Current Assignee: Fannie Mae
• Original Assignee: Fannie Mae
• Inventors: Buist, Henry, Koscinski, Patricia R., Rosenblatt, Eric L., Ajose, Stella Y.
• Primary Examiner(s): Colbert; Ella
• Assistant Examiner(s): OJIAKU, CHIKAODINAKA
• Application Number:
  US12/858,321
• Time in Patent Office: 175 Days
• Field of Search: 705/35, 705/36, 463/26, 455/522
• 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 40/03 Credit; Loans; Processing thereof
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/08 Insurance

Abstract

A method and system for evaluating loan repurchase risk are disclosed. The method includes receiving information related to the loan and determining a loan repurchase risk based on the information. The information may be used to determine a joint probability of an underwriting discrepancy sufficient to trigger a repurchase request and an adverse event in connection with the loan, such as default or delinquency. A repurchase report may provide feedback regarding factors contributing to a repurchase risk. In one embodiment, depending on the repurchase risk, the purchaser may waive repurchase rights in connection with the loan, thereby reducing the requirements of the seller to reserve capital for the loan.

Claims

1. A method of managing loan repurchase rights for a plurality of loans, the method comprising:

determining a repurchase risk for each of the plurality of loans;

waiving repurchase rights on a first subset of the plurality of loans which have the repurchase risk below a predetermined threshold; and

notifying a lender of which loans have repurchase rights that have been waived and which loan repurchase rights that have been retained.

2. A method of evaluating the repurchase risk of a mortgage loan at the time of delivery, the method comprising:

receiving at a purchaser computer system, information, from a seller computer system, related to the loan, the loan having a repurchase right associated therewith requiring a lender who originated the loan to repurchase the loan from a purchaser upon request by the purchaser if certain events have occurred;

determining by the purchaser computer system a joint probability, at least in part based upon the information relating to the loan, of an underwriting discrepancy and an adverse event in connection with the loan; and

determining by the purchaser computer system a loan repurchase risk based on the joint probability.

3. A method of managing loan repurchase rights for a loan, the method comprising:

receiving a waiver of repurchase rights if the repurchase risk is below a predetermined threshold; and

reducing capital reserves based upon the receipt of a waiver of repurchase rights.

4. A method of evaluating the repurchase risk of a mortgage loan at the time of delivery, the method comprising:

receiving at a purchaser computer system, information, from a seller computer system, related to the loan, the loan having a repurchase right associated therewith requiring a lender who originated the loan to repurchase the loan from a purchaser upon request by the purchaser if certain events have occurred;

determining by the purchaser computer system a joint probability, at least in part based upon the information relating to the loan, of an underwriting discrepancy and an adverse event in connection with the loan;

determining by the purchaser computer system a loan repurchase risk, reflecting a risk of the repurchase right becoming exercisable, based upon the joint probability;

storing the determined repurchase risk in a computerized database of the purchaser computer system; and

communicating to the seller computer system a repurchase risk report regarding the loan repurchase risk.

5. The method of claim 4, wherein communicating the repurchase risk report includes identifying if the loan has a repurchase risk above a predetermined risk threshold.

6. The method of claim 5, wherein communicating the repurchase risk report includes providing feedback information regarding what portions of the information provided to the purchaser contributed to the repurchase risk being classified as above the predetermined risk threshold.

7. The method of claim 4, wherein communicating the repurchase risk report includes identifying whether repurchase rights have been waived.

8. The method of claim 4, wherein communicating the repurchase risk report includes providing a repurchase risk score.

9. The method of claim 4, wherein communicating the repurchase risk report includes classifying the loan based on repurchase risk probability.

10. The method of claim 4, wherein communicating the repurchase risk report includes classifying the loan based on quantified repurchase risk.

11. The method of claim 4, wherein communicating the repurchase risk report includes providing a calculated repurchase risk score or a quantified repurchase risk for the loan.

12. A method of evaluating the repurchase risk of a mortgage loan at the time of delivery, the method comprising:

providing to a purchaser computer system, information, from a seller computer system, related to one or more loans, each of the one or more loans having a repurchase right associated therewith requiring a lender who originated the loan to repurchase the loan from a purchaser upon request by the purchaser if certain events have occurred;

receiving from the purchaser computer system a repurchase risk report regarding a repurchase risk for each of the one or more loans, the repurchase risk at least in part based upon the information relating to the loan, of an underwriting discrepancy and an adverse event in connection with the loan.

13. The method of claim 12, further comprising determining, in the seller computer system, if repurchase rights have been waived for each of the one or more loans.

14. The method of claim 12, wherein receiving the repurchase risk report includes identifying if the one or more loans have a repurchase risk above a predetermined risk threshold.

15. The method of claim 14, wherein receiving the repurchase risk report includes receiving feedback information regarding what portions of the information provided to the purchaser contributed to the repurchase risk being classified as above the predetermined risk threshold.

16. The method of claim 12, wherein receiving the repurchase risk report includes notification whether repurchase rights have been waived.

17. The method of claim 12, wherein communicating the repurchase risk report includes receiving a repurchase risk score.

18. The method of claim 12, further comprising calculating a quantified repurchase risk.

19. The method of claim 12, further comprising calculating a probability of exercise of repurchase rights based in part on the repurchase risk.

20. The method of claim 12, wherein receiving the repurchase risk report includes providing a calculated repurchase risk score or a quantified repurchase risk for the loan.