Method of financing home ownership for sub prime prospective home buyers

• US 20050251474A1
• Filed: 12/30/2004
• Published: 11/10/2005
• Est. Priority Date: 12/31/2003
• Status: Abandoned Application

• Current Assignee: Daniel K. Siedlecki, Jeff Richardson, Jennifer Richardson, John Probst, Michael Shinn
• Original Assignee: Daniel K. Siedlecki, Jeff Richardson, Jennifer Richardson, John Probst, Michael Shinn
• Inventors: Probst, John, Richardson, Jennifer, Shinn, Michael, Richardson, Jeff, Siedlecki, Daniel K.
• Application Number:
  US11/026,627
• Publication Number:
  US 20050251474A1
• Time in Patent Office: Days
• US Class Current: 705/39
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 30/06 Buying, selling or leasing transactions
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 50/16 Real estate

Abstract

A program for purchasing homes is disclosed. The program is primarily intended for individuals with a poor or sub prime credit rating that precludes them from qualifying for conventional home loan financing. The individuals improve their credit rating as part of the program. The program is preferably operated as a franchise in which franchisees initially purchase homes on behalf of the individuals, lease the homes to the individuals according to a contract entered prior to purchasing the home and, upon successful fulfillment of the lease, the home is sold to the individual using conventional financing. The fulfillment of the lease-to-own contract assists in improving the individual'"'"'s credit rating and assists in positioning the individual to qualify for conventional home loan financing.

Claims

1. A program for acquiring home ownership, comprising:

a. performing a credit assessment of a prospective home buyer;

b. determining if the prospective home buyer qualifies for the program based upon predetermined criteria;

c. selecting a home for purchase from homes available for sale in a target geographic area and within a target price range;

d. entering into a contract with a third party, said contract identifying the terms by which the prospective home buyer can purchase the selected home;

e. having the third party acquire the selected home;

f. fulfilling the terms of said contract;

g. acquiring conventional financing for the prospective home buyer; and

h. transferring ownership of the selected home from the third party to the prospective home buyer.

2. The program of claim 1, wherein the prospective home buyer has a sub prime credit rating based upon the credit assessment.

3. The program of claim 1, wherein the prospective home buyer does not qualify for conventional home purchase financing.

4. The program of claim 1, wherein the target price range is determined based at least in part upon the credit assessment.

5. The program of claim 3, wherein conventional home purchase financing comprises a bank loan, FHA financing and VA financing.

6. The program of claim 1, wherein fulfilling the terms of the contract improves the credit rating of the prospective home buyer.

7. The program of claim 1, wherein the contract includes terms by which the prospective home buyer leases the selected home from the third party for a period of time whereby fulfilling the terms of the lease, the credit rating of the prospective home buyer is improved to the point that the prospective home buyer qualifies for conventional financing.

8. The program of claim 7, further comprising setting the terms of the contract based in part upon the credit assessment.

9. The program of claim 1, further comprising setting the payment terms of the contract to raise the credit rating of the prospective home buyer whereby when the payment terms are fulfilled the prospective home buyer is more likely to qualify for conventional financing in an amount to permit the prospective home buyer to purchase the selected home from the third party at a predetermined price.

10. The program of claim 1, wherein the contract includes the price that the third party will sell the selected home to the prospective home buyer.

11. The program of claim 1, further comprising forming a franchise and, wherein, the third party is a franchisee of the franchise.

12. The program of claim 1, wherein determining if the prospective home buyer qualifies for the program based upon predetermined criteria comprises assessing the prospective home buyer based upon a credit matrix.

13. The program of claim 12, wherein the predetermined criteria comprise at least one of the following:

FICO score, debt ratio, bankruptcy, foreclosure, income, job duration, amount of collections, judgments and/or charge-offs, and number of collections, judgment and/or charge-offs.

14. A method for prospective home buyers with a sub prime credit rating and who do not qualify for conventional home loan financing to purchase a home, comprising:

a. performing a credit assessment of the prospective home buyer;

b. determining that the prospective home buyer does not qualify for conventional home loan financing based in part upon the credit assessment;

c. determining a plan to improve the credit rating of the prospective home buyer such that, if the plan is implemented and completed, the prospective home buyer will improve their credit rating;

d. selecting a home to purchase based in part upon the credit assessment and plan;

e. preparing a contract that identifies a price the prospective home owner will pay to acquire the selected home and that includes other terms based upon the plan;

f. having the prospective home owner and a first entity enter the contract;

g. having the first entity purchase the selected home according to the terms of the contract;

h. completing the terms of the contract;

i. obtaining conventional home loan financing for the prospective home buyer for the purchase of the selected home at the agreed price identified in the contract; and

j. transferring ownership of the selected home from the first entity to the prospective home buyer.

15. The method of claim 14, wherein the prospective home buyer leases the selected home from the first entity for a period of time and for a known amount identified in the contract.

16. The method of claim 15, further comprising, at the end of the lease term, crediting the prospective home buyer with a portion of the payments made to the first entity and applying that credit to the purchase of the selected home by the prospective home buyer.

17. The method of claim 15, further comprising returning to the prospective home buyer a portion of the payments made to the first entity at the end of the lease period.

18. The method of claim 17, further comprising applying at least a portion of the returned payments as a down payment by the prospective home buyer in purchasing the selected home from the first entity.

19. The method of claim 15, further comprising obtaining an improved credit rating for the prospective home buyer based, in part, upon the lease payments made by the prospective home buyer to the first entity.

20. The method of claim 14, wherein selecting a home comprises selecting a home from all homes for sale in a desired geographic area having a selling price below a predetermined amount.

21. The method of claim 20, wherein selecting a home comprises selecting a new home.

22. The method of claim 15, wherein preparing a contract comprises allowing the prospective home buyer to select financial terms from multiple options.

23. The method of claim 22, wherein the multiple options comprise different amounts of credit to be applied to the purchase of the selected home for the benefit of the prospective home buyer at the end of the lease period.

24. The method of claim 14, further comprising entering into a contract between the first entity and a second entity.

25. The method of claim 24, wherein the contract between the first entity and the second entity comprises a franchise agreement and the first entity is a franchisee and the second entity is a franchisor.

26. The method of claim 24, wherein the credit assessment of the prospective home buyer is performed by one or both of the first and second entities.

27. The method of claim 24, wherein determining that the prospective home buyer does not qualify for conventional home loan financing based in part upon the credit assessment is performed by one or both of the first and second entities.

28. The method of claim 24, wherein determining a plan to improve the credit rating of the prospective home buyer such that, if the plan is implemented and completed, the prospective home buyer will improve their credit rating is performed by one or both of the first and second entities.

29. The method of claim 24, wherein the second entity provides training to the first entity.

30. The method of claim 29, wherein the training involves one or more of the following areas:

assessing credit ratings of prospective home buyers, rehabilitating the credit worthiness of prospective home buyers, buying homes, negotiating with home sellers, and how to obtain conventional loan financing.

31. A system for purchasing homes, comprising:

a. creating a franchise having a franchisor and multiple franchisees, including a first franchisee;

b. having a first prospective home owner and the first franchisee enter a contract;

c. having the first franchisee purchase a home selected by the first prospective home buyer;

d. renting the selected home to the first prospective home buyer according to terms contained in the contract; and

e. selling the selected home to the first prospective home buyer at the end of the rental period which is identified in the contract.

32. The system of claim 31, wherein the first prospective home buyer has a credit rating that does not permit the first prospective home buyer to qualify for conventional home loan financing.

33. The system of claim 32, further comprising improving the credit rating of the first prospective home buyer based upon successful fulfillment of the rental terms contained in the contract.

34. The system of claim 33, further comprising providing the first prospective home buyer with a credit of a portion of the rent payments at the end of the rent period, the credit applied to the purchase of the selected home by the first prospective buyer.

35. The system of claim 31, further comprising operating the franchise on a nationwide basis.

36. The system of claim 34, further comprising allowing the prospective home buyer to select the amount of credit to be received from multiple choices.

37. The system of claim 34, further comprising allowing the prospective home buyer to select a home for purchase from all available homes for sale below a predetermined amount.

38. The system of claim 35, further comprising providing a web site maintained by the franchisor, which web site provides the multiple franchisees with access to form documents for use in connection with operating each franchisee'"'"'s business.

39. The system of claim 40, further comprising providing on the web site an ability to locate franchisees in a specific geographic location.

40. The system of claim 33, wherein each of said multiple franchisees contracts with a plurality of prospective home buyers.

41. The system of claim 33, wherein every prospective home buyer enters into a contract with a franchisee, further comprising entering the contract prior to purchase of the selected home by the franchisee.