System and method for mortgage loan pricing, sale and funding

• US 7,702,580 B1
• Filed: 12/26/2002
• Issued: 04/20/2010
• Est. Priority Date: 06/13/2000
• Status: Active Grant

• Current Assignee: Fannie Mae
• Original Assignee: Fannie Mae
• Inventors: Kane, Michael J., Harrell, Anne, Huffman, Andrew, Simon, Peter A., Fulcher, Patricia D., Youngman, Scott, Alvarez, Neiman, Plotnick, Richard N., Saad, George, Voth, David N.
• Primary Examiner(s): Abdi; Kambiz
• Assistant Examiner(s): Fields; Benjamin S
• Application Number:
  US10/329,878
• Time in Patent Office: 2,672 Days
• Field of Search: None
• US Class Current: 705/40
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 20/102 Bill distribution or payments
• 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
• CPC Class Codes: G06Q 40/04 Trading; Exchange, e.g. stocks, commodities, derivatives or currency exchange

Abstract

Systems and methods for optimizing servicing fees for a set of loans are disclosed. A system for optimizing servicing fees for a set of loans may include a processing unit and a storage device coupled to the processing unit having stored therein information for configuring the processing unit to obtain a minimum servicing fee and a maximum servicing fee, identify net benefits of increasing servicing fees for the loans in the set of loans, and iteratively adjust the servicing fee until the optimal servicing fee is attained.

Claims

1. A computer hardware system comprising:

a processing unit; and

a storage device coupled to the processing unit and having physically-embodied computer program elements, the computer program elements being executed by the processor implementing a process for optimizing a service fee for each loan in a group of loans, the process comprising;

setting a target average servicing fee for the group of loans and storing the target average servicing fee in a database;

setting, for each loan in the group of loans, a minimum servicing fee and a maximum servicing fee and storing the minimum servicing fee and the maximum servicing fee in a database;

determining for each loan the marginal net benefit to the lender for a change to the servicing fee based upon the stored minimum servicing fee;

determining unpaid principal balance points for the group of loans, the unpaid principal balance points are determined from total unpaid principal balance of the group of loans multiplied by the difference between the average service fee and the minimum servicing fee; and

iteratively adjusting the servicing fee by;

determining a weighted average servicing fee for the group of loans, the weighted average servicing fee comprising the average of the sum of an interim servicing fee and an outstanding principal balance for each loan, identifying a loan having the largest marginal net benefit to the lender, adjusting the servicing fee by a predetermined number of basis points for the loan, recalculating the marginal net benefit to the lender for the loan using the adjusted servicing fee, reducing the unpaid principal balance points by an amount equal to the unpaid principal balance of the loan whose servicing fee was adjusted by the difference between the loan'"'"'s servicing fee prior to adjustment and after adjustment, and wherein the iterative adjustment proceeds until the unpaid principal balance points are less than or equal to zero or the adjusted servicing fee for each loan in the group of loans equals the set maximum servicing fee.

2. The system of claim 1, wherein the storage device is further configured to store information relating a value that a purchaser and a value that a seller of the group of loans each respectively place on potential servicing fee levels.

3. The system of claim 1, wherein the marginal net benefit of increasing servicing fees further comprises a marginal cost of an additional servicing fee expressed as an amount a secondary mortgage purchaser will pay for the loan if a rate of the loan is reduced by one basis point.

4. The system of claim 1, wherein the predetermined number of basis points used in determining the marginal net benefit is a one basis point increase to servicing fee.