Loan product with convertible payment terms

• US 8,359,263 B1
• Filed: 12/05/2008
• Issued: 01/22/2013
• Est. Priority Date: 12/05/2008
• Status: Active Grant

• Current Assignee: Bank of America Corp.
• Original Assignee: Bank of America Corp.
• Inventors: Howard, Pamela M., Barbour, Kim T.
• Primary Examiner(s): Kyle, Charles
• Assistant Examiner(s): CRANFORD, MICHAEL D
• Application Number:
  US12/328,895
• Time in Patent Office: 1,509 Days
• Field of Search: 705/38
• US Class Current: 705/38
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03

Abstract

Apparatus and methods for converting a scheduled loan payment between a composite amount and an interest-only amount. A scheduled loan payment may be converted between a composite amount and an interest-only amount. The composite amount may have a first component that includes outstanding principle and a second component that includes interest based on the outstanding principle. Loan payments in the composite amount may be received for a period of time. Upon request by the customer for activation of a payment schedule conversion feature, subsequent scheduled loan payments may be converted from composite payments to interest-only payments. After the payment schedule conversion feature is deactivated, the apparatus and methods may convert subsequent loan payments from interest-only back to a composite amount. Conversion to interest-only payments may be subject to satisfaction of lending risk attenuation criteria.

Claims

1. A method for converting the amount of a scheduled loan payment from a composite amount to an interest-only amount, the composite amount comprising loan principal and interest, the method comprising:

electronically recording a loan payment by a customer, wherein the loan payment comprises the composite amount, and wherein the loan payment is associated with a loan;

receiving a request by the customer for activation of a payment schedule conversion feature, wherein activating the conversion feature converts, for an activation period, the amount of the scheduled loan payment from the composite amount to the interest-only amount, wherein the scheduled loan payment is associated with the loan, and wherein the activation period comprises a limited period of time that is at least two months long;

activating the conversion feature based at least partially on the receiving the request; and

issuing, to the customer after the activating the conversion feature, a statement that defines an amount due as the interest-only amount.

2. The method of claim 1 further comprising:

determining an initial time period that runs from an inception date of the loan to the beginning of the activation period; and

retrieving from computer readable memory an equity building period;

wherein the activating the conversion feature is conditioned on the initial time period being at least as long as the equity building period.

3. The method of claim 1 further comprising:

determining an equity held by the customer; and

calculating an index corresponding to a proportionality between the equity and a collateral value;

wherein the activating the conversion feature is conditioned on the index satisfying a customer equity criterion.

4. The method of claim 3 wherein the customer equity criterion is satisfied only if the customer equity is at least 5% of the collateral value.

5. The method of claim 3 wherein the collateral value is a purchase price of a home.

6. The method of claim 3 wherein the collateral value is a post-purchase appraisal value.

7. The method of claim 1 further comprising:

issuing, to the customer after the activation period, a statement that defines an amount due as a second composite amount.

8. The method of claim 7 wherein the loan comprises an amortization date, and wherein the second composite amount is based on a balance payoff period that runs from the end of the activation period to the amortization date.

9. The method of claim 7 wherein the loan comprises an initial amortization date, wherein the composite amount is substantially equal to the second composite amount, and wherein the second composite amount is based on a balance payoff period that runs from the end of the activation period to a revised amortization date.

10. An apparatus for converting the amount of a scheduled loan payment from a composite amount to an interest-only amount, the composite amount comprising loan principal and interest, the apparatus comprising:

a receiver in electromagnetic communication with a communication network, the receiver being configured to receive a request made by a customer for activation of a payment schedule conversion feature, wherein activating the conversion feature converts, for an activation period, the amount of the scheduled loan payment from the composite amount to the interest-only amount, and wherein the activation period comprises a limited period of time that is at least two months long; and

a transmitter that is configured to transmit, after the conversion feature is activated, a statement for the customer that defines an amount due as the interest-only amount.

11. The apparatus of claim 10 wherein the activation period is at least 12 months long.

12. The apparatus of claim 10 further comprising a processor that is configured to:

determine an initial time period that runs from an inception date of the loan to the beginning of the activation period;

retrieve from computer readable memory an equity building period; and

instruct the transmitter to transmit the statement only if the initial time period is at least as long as the equity building period.

13. The apparatus of claim 10 further comprising:

a processor that is configured to;

determine an equity held by the customer;

retrieve from computer readable memory a collateral value;

calculate an index corresponding to a proportionality between the equity and the collateral value; and

instruct the transmitter to transmit the statement only if the index satisfies a customer equity criterion.

14. The apparatus of claim 13 wherein the customer equity criterion is satisfied only if the customer equity is at least 5% of the collateral value.

15. The apparatus of claim 13 wherein the collateral value is a purchase price of a home.

16. The apparatus of claim 13 wherein the collateral value is a post-purchase appraisal value.

17. The apparatus of claim 10 wherein the loan comprises an amortization date, the apparatus further comprising:

a processor that is configured to calculate a second composite amount corresponding to a balance payoff period that runs from the end of the activation period to the amortization date.

18. The apparatus of claim 10 wherein the loan comprises an initial amortization date, the apparatus further comprising:

a processor that is configured to calculate a second composite amount corresponding to a balance payoff period that runs from the end of the activation period to a revised amortization date.

19. The apparatus of claim 18 wherein the second composite amount is substantially equal to the composite amount.

20. One or more computer-readable media storing computer-executable instructions which, when executed by a processor on a computer system, perform a method for converting the amount of a scheduled loan payment from a composite amount to an interest-only amount, the composite amount comprising loan principal and interest, the method comprising:

receiving a request by a customer for activation of a payment schedule conversion feature, wherein activating the conversion feature converts, for an activation period, the amount of the scheduled loan payment from the composite amount to the interest-only amount, wherein the activation period comprises a limited period of time that is at least two months long;

storing in computer readable memory information associated with the request; and

activating the conversion feature based at least partially on the receiving the request.

21. The media of claim 20 wherein, in the method, the activation period is at least 12 months long.

22. The media of claim 20, wherein the method further comprises:

determining an initial time period that runs from an inception date of the loan to the beginning of the activation period; and

retrieving from computer readable memory an equity building period;

wherein the activating the conversion feature is conditioned on the initial time period being at least as long as the equity building period.

23. The media of claim 20 wherein the method further comprises:

determining an equity held by the customer; and

calculating an index corresponding to a proportionality between the equity and a collateral value;

wherein the activating the conversion feature is conditioned on the index satisfying a customer equity criterion.

24. The media of claim 23 wherein, in the method, the customer equity criterion is satisfied only if the customer equity is at least 5% of the collateral value.

25. The media of claim 23 wherein, in the method, the collateral value is a purchase price of a home.

26. The media of claim 23 wherein, in the method, the collateral value is a post-purchase appraisal value.

27. The media of claim 20 wherein the method further comprises:

issuing, to the customer during the activation period, a first statement that defines an amount due as the interest-only amount; and

issuing, to the customer after the activation period, a second statement that defines an amount due as a second composite amount.

28. The media of claim 27 wherein, in the method, the loan comprises an amortization date, and wherein the second composite amount is based on a balance payoff period that runs from the end of the activation period to the amortization date.

29. The media of claim 27 wherein, in the method, the loan comprises an initial amortization date, wherein the composite amount is substantially equal to the second composite amount, and wherein the second composite amount is based on a balance payoff period that runs from the end of the activation period to a revised amortization date.

30. One or more computer-readable media storing computer-executable instructions which, when executed by a processor on a computer system, perform a method for converting the amount of a scheduled loan payment from a composite amount to an interest-only amount, the composite amount comprising loan principal and interest, the method comprising:

receiving a first request by the customer for activation of a payment schedule conversion feature, wherein activating the conversion feature in response to the first request converts, for a first activation period, the amount of the scheduled loan payment from the composite amount to the interest-only amount, wherein the first activation period comprises a limited period of time that is at least two months long;

issuing to the customer, during the first activation period, a statement that defines an amount due as the interest-only amount;

receiving a second request by the customer for activation of the payment schedule conversion feature, wherein activating the conversion feature in response to the second request converts, for a second activation period, the amount of a scheduled loan payment from a second composite amount to an interest-only amount, wherein the second activation period comprises a limited period of time that is at least two months long, and wherein the second activation period is different than the first activation period; and

issuing to the customer, during the second activation period, a statement that defines an amount due as the interest-only amount.

31. The media of claim 30 wherein, in the method, the first and second activation periods are contiguous in time.

32. The media of claim 30 wherein the method further comprises:

issuing to the customer, after the first activation period and before the second activation period, a statement that defines an amount due as a second composite amount, wherein the second composite amount is based on a principal balance and a balance payoff period commencing at the end of the first activation period.