Equity protection

• US 8,190,516 B2
• Filed: 01/10/2011
• Issued: 05/29/2012
• Est. Priority Date: 05/18/2007
• Status: Active Grant

• Current Assignee: Bank of America Corp.
• Original Assignee: Bank of America Corp.
• Inventors: Ghosh, Debashis, Banerjee, Sudeshna, Upchurch, William Michael, Eshleman, Robert H., Trainor, Christopher James, Turner, Frank B.
• Primary Examiner(s): Colbert, Ella
• Assistant Examiner(s): Shaikh, Mohammad Z
• Application Number:
  US12/987,758
• Publication Number:
  US 20110178920A1
• Time in Patent Office: 505 Days
• Field of Search: 705 35- 42
• US Class Current: 705/38
• 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
• CPC Class Codes: G06Q 40/06 Asset management; Financial planning or analysis

Abstract

Systems and methods are illustrated for providing an equity protection product to a borrower of a loan. Aspects of the equity protection product may be implemented using an equity protection agreement. The equity protection product may be used to safeguard a borrower'"'"'s investment in the event of a housing market downturn. In some examples, once the equity protection is purchased, the borrower'"'"'s equity can only increase or remain stable (i.e., flat) regardless of market conditions. The payoff amount of the borrower'"'"'s loan may be reduced to compensate for a change in the market value of the borrower'"'"'s home. The equity protection product may be provided by a lending institution, bank, or any other comparable entity/person. A trading desk may also be used to hedge against the risk created by the equity protection product. In addition, an appraiser may also be used to evaluate and provide current market values of the relevant property.

Claims

1. A computer-assisted method, comprising:

(a) receiving loan information corresponding to a loan of a borrower, at a computerized system, the loan information including a unique identifier of a property corresponding to the loan; and

(b) recording terms of an equity protection agreement in the computerized system, the equity protection agreement having terms including an initial market value of a property corresponding to the loan, wherein the equity protection agreement has been accepted by the borrower, the computerized system configured to receive the property'"'"'s market value as an input and to adjust the loan information according to the terms of the equity protection agreement at a predetermined interval of time based on at least the input.

2. The method of claim 1, the property comprising real property, the loan including a mortgage on the real property, and the unique identifier of the real property comprising a street address.

3. The method of claim 2, comprising:

sending the borrower a report at a predetermined interval, the report comprising the property'"'"'s market value at a particular time.

4. The method of claim 3, the report including a payoff amount output from the computerized system, the computerized system configured to adjust the payoff amount based on a change in the property'"'"'s market value.

5. The method of claim 4, the payoff amount being adjusted to zero if the property'"'"'s market value has decreased by more than the payoff amount.

6. The method of claim 1, further comprising:

trading at a trading terminal a financial instrument of an index including at least the property to hedge against risk.

7. The method of claim 6, where the trading the financial instrument includes:

trading an option on a housing index associated with a region containing the real property to hedge against risk associated with the equity protection agreement.

8. The method of claim 1, further comprising:

determining the terms of the equity protection agreement, wherein the terms further include a fee.

9. The method of claim 8, wherein determining terms of the equity protection agreement includes evaluating the property using an automated valuation model.

10. The method of claim 8, wherein the fee of the equity protection agreement is divided and a portion of the fee is due monthly with loan payments, and where the fee is returned to the borrower if the borrower does not receive a payoff amount reduction within a predetermined time after accepting the equity protection agreement.

11. The method of claim 8, wherein the fee of the equity protection agreement is paid through a predetermined increase in an annual percentage rate of the loan.

12. The method of claim 8, where the determining terms of the equity agreement includes evaluating the property based on at least a value of a housing index associated with a region containing the real property.

13. The method of claim 1, wherein the predetermined interval of time is one year.

14. The method of claim 1, wherein the computerized system is configured to provide a website, further comprising:

receiving, through the website at the computerized system, a request from the borrower that an appraisal be performed on the property and any change in the property'"'"'s market value be identified to the borrower.

15. An apparatus, comprising:

a memory storing computer-executable instructions;

a processor configured to execute the computer-executable instructions to cause the apparatus to perform a method comprising;

(a) receiving loan information corresponding to a loan of a borrower, the loan information including a unique identifier of a property corresponding to the loan;

(b) recording terms of an equity protection agreement in the memory, the equity protection agreement having terms including an initial market value of a property corresponding to the loan, wherein the equity protection agreement has been accepted by the borrower; and

(c) receiving the property'"'"'s market value as an input and adjusting the loan information according to the terms of the equity protection agreement at a predetermined interval of time based on at least the input.

16. The apparatus of claim 15, wherein the processor is configured to execute the computer-executable instructions to further perform:

outputting a report configured for sending to the borrower, at a predetermined interval, the report comprising the property'"'"'s market value at a particular time.

17. The apparatus of claim 16, the report including a payoff amount for the loan, wherein the processor is configured to execute the computer-executable instructions to further perform:

adjusting the payoff amount based on a change in the property'"'"'s market value.

18. The apparatus of claim 17, the payoff amount being adjusted to zero if the property'"'"'s market value has decreased by more than the payoff amount.

19. The apparatus of claim 15, wherein the predetermined interval of time is one year.

20. A computer-assisted method, comprising:

(a) receiving, at a computerized system, mortgage information corresponding to a mortgage of a property, the information including a payoff amount of the mortgage;

(b) receiving, at the computerized system, terms of an equity protection agreement that has been accepted by a borrower associated with the mortgage, the terms including a market value of the property;

(c) recording the mortgage information and the terms of the equity protection agreement in the computerized system;

(d) at a predetermined interval of time, adjusting the payoff amount of the mortgage according to a decrease in the property'"'"'s market value, using the computerized system; and

(e) outputting the adjusted payoff amount of the mortgage for display to the borrower, using the computerized system.

21. The method of claim 20, further comprising:

receiving, through a website provided by the computerized system, a request from the borrower that an appraisal be performed on the property and any change in the property'"'"'s market value be identified to the borrower.

22. The method of claim 20, the payoff amount being adjusted to zero if the property'"'"'s market value has decreased by more than the payoff amount.

23. The method of claim 20, further comprising:

trading at a trading terminal a financial instrument of an index including at least the property to hedge against risk.

24. The method of claim 23, where the trading the financial instrument includes:

trading an option on a housing index associated with a region containing the real property to hedge against risk associated with the equity protection agreement.

25. An apparatus, comprising:

a memory storing computer-executable instructions;

a processor configured to execute the computer-executable instructions to cause the apparatus to perform a method comprising;

(a) receiving mortgage information corresponding to a mortgage of a property, the information including a payoff amount of the mortgage;

(b) receiving terms of an equity protection agreement that has been accepted by a borrower associated with the mortgage, the terms including a market value of the property;

(c) recording the mortgage information and the terms of the equity protection agreement in the memory;

(d) at a predetermined interval of time, adjusting the payoff amount of the mortgage according to a decrease in the property'"'"'s market value; and

(e) outputting the adjusted payoff amount of the mortgage for display to the borrower.

26. The apparatus of claim 25, wherein the processor is configured to execute the computer-executable instructions to further perform:

receiving, through a website provided by the apparatus, a request from the borrower that an appraisal be performed on the property and any change in the property'"'"'s market value be identified to the borrower.

27. The method of claim 25, the payoff amount being adjusted to zero if the property'"'"'s market value has decreased by more than the payoff amount.