Guarantee certificates

• US 8,065,208 B1
• Filed: 02/10/2006
• Issued: 11/22/2011
• Est. Priority Date: 08/27/1999
• Status: Expired due to Fees

• Current Assignee: Federal Home Loan Mortgage Corporation
• Original Assignee: Federal Home Loan Mortgage Corporation
• Inventors: Cassidy, Henry J., Abrahams, Steven W.
• Primary Examiner(s): Subramanian; Narayanswamy
• Application Number:
  US11/350,872
• Time in Patent Office: 2,111 Days
• Field of Search: 705 35- 36 R, 705 35- 38
• US Class Current: 705/35
• 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 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis
• CPC Class Codes: G06Q 40/10 Tax strategies

Abstract

Methods and systems are provided for issuing a new type of security, referred to herein as a “Guarantee Certificate,” which offers payments to a holder contingent upon the occurrence of specified risk-related events that would typically trigger an insurance or guaranty payment. Guarantee Certificates offer a mechanism for separating certain payment rights associated with a pool of assets (which may or may not be securitized) from the remaining payment rights associated with the pool, such that the payment rights form separate, transferable financial instruments. These instruments evidence an obligation of a mortgage insurer or a securities guarantor to make payments triggered by certain default-related events involving a corresponding (in the case of a mortgage insurer) or an underlying (in the case of a securities guarantor) mortgage loan or loans. A data processing system creates and maintains information corresponding to the Guarantee Certificates. A Guarantee Certificate may be tradable by the holder.

Claims

1. A method for administering a guarantee certificate, which is a financial instrument representing an obligation of a first party to make payments triggered by a triggering loan-default-related event involving a loan, the method comprising the steps of:

determining, using a data processing system including a computer processor, when the triggering loan-default-related event has occurred;

calculating, using the data processing system, a payment based on the determined triggering loan-default-related event; and

issuing, using the data processing system, a command to make the payment to a holder of the guarantee certificate,

the holder of the guarantee certificate being entitled to the payment due to ownership of the guarantee certificate and

not being the first party.

2. The method of claim 1, wherein the step of determining when the triggering loan-default-related event has occurred includes:

querying an information source for a current status of the loan; and

comparing, by the data processing system, the current status to the triggering loan-default-related event.

3. The method of claim 1, wherein the step of determining when the triggering loan-default-related event has occurred includes:

accepting a current status of the loan; and

comparing, by the data processing system, the current status to the triggering loan-default-related event.

4. The method of claim 1, wherein the step of calculating the payment includes:

calculating, by the data processing system, the payment as a dollar-for-dollar pass through of an amount paid by the first party.

5. The method of claim 1, wherein the step of calculating the payment includes:

calculating, by the data processing system, the payment as an amount determined by a non-pass-through formula based on a predetermined loan-default-related event trigger.

6. The method of claim 1, wherein the step of issuing the payment to a holder of the guarantee certificate includes:

issuing, by the data processing system, instructions to an agent to pay the payment to the holder of the guarantee certificate.

7. The method of claim 1, further comprising:

updating an identity of the holder of the guarantee certificate after the guarantee certificate is conveyed to a new holder.

8. The method of claim 1,

wherein the loan is an insured loan, and

wherein issuing the payment further comprises:

directing an insurance payment generated for the insured loan to the holder of the guarantee certificate.

9. The method of claim 1, wherein the holder of the guarantee certificate is entitled to the payment due to ownership of the guarantee certificate, independently of whether the holder of the guarantee certificate is entitled to cash flows derived from payments by a borrower of the loan.

10. A system for administering a guarantee certificate, which is a financial instrument representing an obligation of a first party to make payments triggered by a default-related event involving a loan, the system comprising:

a memory that holds information and instructions; and

a processor, communicatively connected to the memory, that accesses the information and the instructions to implement a process comprising;

determining when the default-related event involving the loan has occurred;

calculating a payment when it is determined that the default-related event has occurred; and

issuing a command to make the payment to a holder of the guarantee certificate,

the holder of the guarantee certificate being entitled to the payment due to ownership of the guarantee certificate and

not being the first party.

11. The system of claim 10, wherein determining when the default-related event has occurred includes:

querying an information source for a current status of the loan; and

comparing the current status to the default-related event.

12. The system of claim 10, wherein determining when the default-related event has occurred includes:

receiving a current status of the loan; and

comparing the current status to the default-related event.

13. The system of claim 10, wherein calculating the payment includes:

calculating the payment as a dollar-for-dollar pass through of an amount paid by the first party.

14. The system of claim 10, wherein calculating the payment includes:

calculating the payment as an amount determined by a non-pass-through formula based on a predetermined default-related event trigger.

15. The system of claim 10, wherein issuing the payment to the holder of the guarantee certificate includes:

issuing instructions to an agent to pay the payment to the holder of the guarantee certificate.

16. A tangible computer program product comprising:

a computer usable solid medium having computer readable code embodied therein for administering a guarantee certificate, which is a financial instrument representing an obligation of a first party to make payments triggered by a default-related event involving a loan, comprising;

computer readable code for determining when the default-related event has occurred;

computer readable code for calculating a payment based on the determined default-related event; and

computer readable code for issuing a command to make the payment to a holder of the guarantee certificate,

the holder of the guarantee certificate being entitled to the payment due to possession of the guarantee certificate and

not being the first party.

17. The tangible computer product of claim 16 wherein the computer readable code for determining when the default-related event has occurred includes:

computer readable code for querying an information source for a current status of the loan; and

computer readable code for comparing the current status to the default-related event.

18. The tangible computer product of claim 16, wherein the computer readable code for determining when the default-related event has occurred includes:

computer readable code for accepting a current status of the loan; and

computer readable code for comparing the current status to the default-related event.

19. The tangible computer product of claim 16, wherein the computer readable code for calculating the payment includes:

computer readable code for calculating the payment as a dollar-for-dollar pass through of an amount paid by the first party.

20. The tangible computer product of claim 16, wherein the computer readable code for calculating the payment includes:

computer readable code for calculating the payment as an amount determined by a non-pass-through formula based on a predetermined default-related event trigger.

21. The tangible computer product of claim 16, wherein the computer readable code for issuing a command to make the payment to a holder of the guarantee certificate includes:

computer readable code for issuing instructions to an agent to pay the payment to the holder of the guarantee certificate.

22. A method for administering a guarantee certificate, which is a financial instrument representing an obligation of a first party to make payments triggered by a triggering loan-default-related event involving a loan, the method comprising the steps of:

determining, using a data processing system including a computer processor, when the triggering loan-default-related event has occurred;

calculating, using the data processing system, a payment based on the determined triggering loan-default-related event, the payment being calculated as an amount determined by a non-pass-through formula; and

issuing, using the data processing system, a command to make the payment to a holder of the guarantee certificate,

the holder of the guarantee certificate being entitled to the payment due to ownership of the guarantee certificate and

not being the first party.