System and method for pricing loans in the secondary mortgage market

• US 7,979,346 B2
• Filed: 10/01/2010
• Issued: 07/12/2011
• Est. Priority Date: 12/30/2002
• Status: Active Grant

• Current Assignee: Fannie Mae
• Original Assignee: Fannie Mae
• Inventors: Kemper, John L., Voth, David N., Nolan, William R. III, Kopperman, Peter G.
• Primary Examiner(s): Akintola; Olabode
• Assistant Examiner(s): Preston; John O
• Application Number:
  US12/896,432
• Publication Number:
  US 20110112955A1
• Time in Patent Office: 284 Days
• Field of Search: 705/38, 705/36.R, 705/37
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/382 insuring higher security of transaction
• 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

Abstract

A system is provided for generating pricing information regarding loans where each loan has loan level data and is associated with a borrower. The system includes a pricing engine for generating a price for each loan including an interest rate component and a credit risk component. The credit risk component is generated based on loan level data for the particular loan.

Claims

1. A method for generating a cash purchase price for one or more loans sold by a seller to a purchaser in a secondary mortgage market, the method comprising:

providing a computer-implemented user interface to the seller;

providing a computer database coupled to the computer-implemented user interface and configured to store a plurality of authorization profiles, each authorization profile including a user identifier and agreement data for an agreement governing purchases of existing loans in the secondary mortgage market;

receiving a user identifier associated with the seller via the computer-implemented user interface;

verifying the identity of the seller associated with the user identifier against the authorization profile and providing the seller access to the agreement data associated with the user identifier;

retrieving the agreement data, wherein the agreement data includes a standard credit risk price component, a standard loan profile, and a standard borrower credit profile applicable to secondary mortgage market loan purchases under the agreement, including purchases of loans made to different borrowers;

receiving loan data associated with each of the one or more loans to be sold by the seller to the purchaser under the agreement;

generating, by a computer, an interest rate price for each of the one or more loans;

utilizing the loan data for each of the one or more loans and the standard loan profile to generate a set of variances from the standard loan profile for each of the one or more loans;

utilizing the loan data for each of the one or more loans and the a standard credit risk profile to generate a set of variances from the standard borrower credit profile for each of the one or more loans;

generating, by the computer, a credit risk price for each loan based upon at least;

the standard credit risk price component;

the set of variances from the standard loan profile;

the set of variances from the standard borrower credit profile; and

the loan data associated with each loan;

generating, by the computer, the cash purchase price for each of the one or more loans based on the interest rate price and the credit risk price; and

providing a display of the cash purchase price for each of the one or more loans to the seller using the computer-implemented user interface.

2. A method according to claim 1, wherein the standard loan profile includes at least loan term data, loan type data, and residence type data.

3. A method according to claim 2, wherein available values for the loan type data include a new loan, a refinanced loan, and a cashout refinanced loan.

4. A method according to claim 2, wherein available values for the residence type data include an investment property and a primary residence.

5. A method according to claim 2, wherein available values for the loan term data include a 15 year term and a 30 year term.

6. A method according to claim 1, wherein the interest rate price for each of the one or more loans is generated based upon at least:

a standard interest rate price component;

a seller-based price reduction; and

the loan data associated with each loan.

7. A method according to claim 1, wherein the standard borrower credit profile includes at least open accounts data, derogatory accounts data, and undisclosed accounts data.

8. A method according to claim 1, wherein a purchase price for the loan is further based upon loan performance data received from the seller.

9. A method for generating a securitization price for a financial asset backed by loans provided by a seller to a purchaser in the secondary mortgage market, the method comprising:

providing a computer-implemented user interface to the seller;

receiving a user identifier associated with the seller via the computer-implemented user interface;

providing a computer database coupled to the computer-implemented user interface and configured to store an authorization profile, the authorization profile being associated with the user identifier and agreement data associated with the agreement and governing purchases of existing loans in the secondary mortgage market, wherein the agreement data includes a standard interest rate price component, a standard credit risk price component, a standard loan profile, a standard borrower credit profile, and a standard guarantee fee to secondary mortgage market loan purchases under the agreement, including purchases of loans made to different borrowers;

receiving, from the seller, loan data associated with at least one existing loan offered for sale;

generating, by a computer, an interest rate price component for each of the at least one loan;

comparing the loan data for each of the at least one loan and the standard loan profile and generating a set of variances from the standard loan profile for each loan;

comparing the loan data for each of the at least one loan and a standard credit risk profile and generating a set of variances from the standard borrower credit profile for each of the at least one loan;

generating, by the computer, a credit risk price component for each of the at least one loan based upon at least;

the standard credit risk price component;

the set of variances from the standard loan profile;

the set of variances from the standard borrower credit profile; and

the loan data associated with each loan;

generating, by the computer, a guarantee fee for guaranteeing timely payment on each of the at least one loans backing the financial asset based upon at least;

the standard guarantee fee;

the set of variances from the standard loan profile;

the set of variances from the standard borrower credit profile; and

the loan performance data; and

generating, by the computer, the securitization price based on at least the interest rate price component, the credit risk price component, and the guarantee fee.

10. A method according to claim 9, wherein the standard loan profile includes at least loan term data, loan type data, and residence type data.

11. A method according to claim 10, wherein available values for the loan type data include a new loan, a refinanced loan, and a cashout refinanced loan.

12. A method according to claim 10, wherein available values for the loan term data include a 15 year term and a 30 year term.

13. A method according to claim 10, wherein available values for the residence type data include an investment property and a primary residence.

14. A method according to claim 9, wherein the interest rate price for each of the at least one loan is generated based upon at least:

a standard interest rate price component;

a seller-based price reduction; and

the loan data associated with each loan.

15. A system for generating pricing information regarding loans, each loan being associated with an agreement, the system comprising:

at least one computer;

a computer database coupled to the computer and configured to store an authorization profile associated with a user identifier and agreement data associated with the agreement;

computer-implemented logic stored in computer readable storage media which, when executed by the computer, causes the computer to;

receive the user identifier from the seller via the computer;

verify the identity of the seller against the authorization profile and provide the seller access to the agreement data based on the user identifier, wherein the agreement data includes a standard interest rate price component, a standard credit risk price component, a standard loan profile, and a standard borrower credit profile applicable to secondary mortgage market loan purchases under the agreement, including purchases of loans made to different borrowers;

receive loan data associated with each loan from the seller;

generate an interest rate price component for each loan;

compare the loan data for each loan and the standard loan profile and generate a set of variances from the standard loan profile for each loan;

compare the loan data for each loan and a standard credit risk profile and generate a set of variances from the standard borrower credit profile for each loan;

generate a credit risk price component for each loan based upon at least;

the standard credit risk price component;

the set of variances from the standard loan profile;

the set of variances from the standard borrower credit profile; and

the loan data associated with each loan; and

generate the pricing information for each loan based on the interest rate price component and the credit risk price component.

16. A method according to claim 15, wherein the standard loan profile includes at least loan term data, loan type data, and residence type data.

17. A system according to claim 16, wherein available values for the loan type data include a new loan, a refinanced loan, and a cashout refinanced loan.

18. A system according to claim 16, wherein available values for the loan term data include a 15 year term and a 30 year term.

19. A system according to claim 16, wherein available values for the residence type data include an investment property and a primary residence.

20. A system according to claim 15, wherein the pricing information includes a guarantee fee for guaranteeing timely payment on the loans, wherein the loans back a financial asset.