Patent Grant
8799127
Borrowers often take out loans to finance significant purchases, such as purchases of property. Such loans are then paid off over a period of time according to a predetermined payment schedule. Sometimes, a borrower may wish to pay off a loan early (“prepayment”). Often times, determining the amount that is to be paid when prepayment occurs is a time-consuming and error-prone process. In addition to the unpaid principal balance, any unpaid interest, and any other processing fees or charges, many loans include prepayment premiums that are to be paid upon early satisfaction of the loan. Prepayment premiums ensure that the lender receives the expected interest payments for the loan or some otherwise satisfactory compensation.
The manner in which the payoff amount (including the prepayment premium) is to be calculated is typically specified in the loan agreement between the borrower and lender. There are various ways that loan agreements typically specify for calculating prepayment premiums. One conventional method, known as “declining premium,” specifies premiums to be paid which decline as the loan reaches maturity. Another conventional method, known as “yield maintenance,” allows the lender to attain the same yield as if the borrower had made all scheduled mortgage payments until maturity. Yield maintenance prepayment premiums typically are designed to make lenders indifferent to an early prepayment by a borrower. To this end, the yield maintenance payoff amount is typically calculated based on a reference interest rate (e.g., US treasury rate). The prepayment premium may be equal to the present value of unpaid principal and interest payments. There are a number of factors that may significantly influence payoff calculations and administration, e.g., the date from which the prepayment premium is calculated, the reason for early satisfaction of the loan, the interest rate on the loan, etc.
In addition, once a loan is paid off, there are often times multiple parties that receive a portion of the funds received from the borrower. For example, the lender or other servicer typically receives a portion of the payoff amount from the borrower. Additionally, many loans are often resold or repackaged in secondary markets. For example, in the mortgage finance industry, multi-family homes may serve as collateral for loans which are subsequently pooled and used to create an MBS (mortgage-backed security). The MBS is an investment instrument that can be sold to investors in the global capital markets. Upon sale of the MBS, lenders can turn around and make new loans using proceeds from the sale. In effect, the MBS is a way for the global capital markets to provide capital for loans to fund home ownership. When a loan is pooled into an MBS, the investor in the MBS is among the parties that receives a portion of the payoff funds received from the borrower.
The time-consuming and tedious nature of calculating payoff amounts is made worse by the fact that these amounts may be calculated multiple times throughout the life of a loan. In addition to calculating the payoff amount and the prepayment premium when the borrower actually pays off the loan, it is often desirable to calculate these amounts at other times. For example, in some instances, a borrower may be contemplating paying off the loan early, and may request a quote so that the borrower knows what the payoff amount would be, i.e., should the borrower decide to actually pay off the loan. Ultimately, however, the borrower may decide not to pay off the loan at that time. Accordingly, interested parties may request information regarding payoff amounts and prepayment premiums multiple times during the life of the loan.
Therefore, there is a need to provide a system that makes payoff quoting and reporting more convenient. Additionally, there is a need for a system which provides easier access to information regarding payoff amounts. It should also be understood that the techniques described herein may also be applied to meet other needs instead of or in addition to the above needs. For example, although the systems and methods discussed herein are described in terms of home mortgages, it will be apparent that the systems and methods may be used in connection with other types of assets, loans and/or other investments.
An exemplary embodiment relates to a data processing system for generating loan payoff information, that includes: payoff calculation logic configured to accept loan information and generate a payoff quote for a loan. The payoff quotes include: (i) a prepayment premium for premature satisfaction of a loan; and (ii) a total payoff amount for the premature satisfaction of the loan. User interface logic is configured to communicate the payoff quote via a network.
The exemplary embodiments will hereafter be described with reference to the accompanying drawings, wherein like numerals denote like elements.
Referring now to
The lenders 12 makes loans to borrowers 22 to finance the purchase of properties. Herein, it is assumed for purposes of providing an example that the data processing system 16 is used in the context of loans for multi-family properties. In exchange for cash to purchase the home, the borrower 22 and lender 12 enter into a loan agreement. The terms of the loan agreement set forth the method of calculating any prepayment premiums and the total payoff amount for the loan if the loan is satisfied prematurely. Lenders 12 may have a variety of different mortgage products that are made available to various borrowers. Such loan products may have different payment terms (e.g., regarding frequency of payments, prepayment premiums, miscellaneous fees and total payoff amounts) set forth in the loan agreement.
The loan servicers 14 accept payments for each loan. In some cases, the lender 12 may perform both loan origination and the loan servicing itself, in which case the lender 12 and the loan servicer 14 for a given loan are the same entity. In other cases, the lender 12 may originate the loan, but then outsource servicing or sell servicing rights to servicer 14, in which case the lender 12 and the loan servicer 14 are separate entities.
The secondary mortgage market participant (e.g., purchaser) 18 purchases the loan or performs other services in connection with the loan, for example, guaranteeing the timely payment of principal and interest. The data processing system 16 is preferably usable to support various types of transactions which may be executed by the secondary mortgage market participant 18 in connection with one or more loans. For example, the participant 18 may purchase loans from lenders or other loan originators as part of a cash execution. For example, the lender 12 may sell loans to purchaser 18 for cash, and the purchaser 18 may pool the loans with other loans and issue MBS to investors 20. Alternatively, the purchased loans may also, for example, be held as investments in the purchaser's investment portfolio. Alternatively, the purchaser 18 may create mortgage backed securities (MBS) as part of an MBS execution, or create other financial instruments or assets that are backed by cash flows associated with individual loans. In this case, the MBS may be sold to investors 20 by the lender 12 in exchange for cash funds enabling lenders 12 to provide additional home loans to an increased number of borrowers 22. The participant 18 may also use loans to create other types of financial assets or instruments, or may perform other services, such as guaranteeing the timely payment of principal and interest in exchange for a fee. Herein, for purposes of providing an example, it is assumed that the secondary mortgage market participant 18 (hereinafter, “purchaser 18”) purchases the loans.
The data processing system may be maintained by one of the lenders 12, one of the servicers 14, the purchaser 18, or one of the investors 20. Herein, for purposes of providing an example, it is assumed that the data processing system 16 is maintained and operated by the purchaser 18. The data processing system 16 performs the accounting for each loan and may serve as the system of record for such loans. For every payment received from a borrower 22, the appropriate amounts are applied to the unpaid principal balance, interest owed, etc. Any over or under payments are documented and adjudicated by the loan servicer 14. Any defaults are reported to the purchaser 18 and/or other interested entities. Data processing system 16 also reports the performance of the MBS to investors 20, e.g., via the network 10. The financial performance of the MBS depends on the actual payments received or collected for each loan. In the case of a loan payoff, data processing system 16 may further be configured to calculate the payoff amount that is due (e.g., when early payoff is requested); to calculate the apportionment of the paid amounts between the lender 12, the servicer, 14, the purchaser 18, and/or the investors 18; and to provide information concerning these amounts to the relevant parties.
For example, during the life of a loan, a borrower that is considering paying off its loan early may request a payoff quote. The manner in which the data processing system 16 is accessed to generate the payoff quote may depend on which parties have direct access to the data processing system 16 to request such quotes. For example, if only the purchaser 18 has direct access to request payoff quotes, then the request for the payoff quote may be manually (e.g. telephonically) transmitted from the borrower 22 to the purchaser 18 (e.g., via the servicer 14), and an employee of the purchaser 18 may access the data processing system 16 to generate the payoff quote. In another embodiment, the lenders 12 and/or servicers 14 may be provided with direct access to request payoff quotes. In yet another embodiment, the borrowers 22 may also be provided with direct access to request payoff quotes.
As described in greater detail below, various user interface screens (e.g., web pages) may be provided to collect any needed information concerning the payoff quote request and to provide results to one or more users. In some embodiments, the payoff quote may be forwarded directly to the lenders 12, loan servicers 14, purchasers 18 and/or investors 20 via the network 10. In other embodiments, once the payoff quote is generated, it may be reviewed by a human analyst to confirm that it is correct. The human analyst may be an employee of the purchaser 18. In other embodiments, the human analyst may be an employee of the lender 12 or the loan servicer 14. Once the payoff quote is received by the lender 12 or loan servicer 14, another human analyst may review the quote based on data maintained by the lender/servicer. Such user may then acquiesce to the payoff projection and accompanying total payoff amount or reject it. For example, if the payoff quote is believed to be incorrect, various user interface screens may be provided which permit the lender 12 or the loan servicer 14 to submit requests to resolve data discrepancies that they believe they have detected while reviewing a payoff quote for a loan (e.g., a discrepancy in purchaser data for the loan as compared to lender data for the loan).
As will be appreciated, in some cases, based on the payoff amount, the borrower may decide not to pay off the loan, at least not at that time. In other cases, the borrower may decide to move forward with paying off the loan. Once a payoff quote is generated, the payoff quote and related data may be archived for subsequent retrieval and analysis, should such retrieval and analysis become necessary. For example, at a later date, a question may arise as to whether the payoff amount paid by the borrower was correct. Archiving the payoff quote and related historical data may create a suitable audit trail to permit users to know how the payoff quote was generated, who created/approved/deleted it, and so on, for review at a later time.
Referring now to
The servicing home page 13 may provide an access portal for data processing system 16 where servicing-related operations may be performed. For example, servicers 14 may access servicing home page 13 to submit monthly payment information, to reconcile loan data and current loan balances, and so on. The home page 13 may include an html link which is appropriately labeled to indicate payoff quote functionality and which delivers the user to the data input page (or pages) 15. The data input page 15 receives user and loan information from users to permit payoff quotes to be generated. (Examples of data input pages are provided with reference to
The payoff quote 28 may be generated based on data that is manually entered, data that is retrieved from electronic data sources, or a combination of both. In the illustrated embodiment of
Referring now to
Issuing logic 49 accepts loan information 24 for a number of loans and securitizes the loans for investment purposes. Issuing logic 49 is used to generate financial assets. Herein, the term “issuing logic” refers to any logic that is used to generate/create financial assets. The issuing logic 49 may be used to generate financial assets such as MBS, debt instruments, or any of the other types of financial instruments. The issuing logic 49 may also be used to generate financial assets that are tracked internally in situations where the owner/operator of the data processing system 16 purchases a pool of loans and holds the loans as an investment in its own portfolio.
Payoff calculation logic 50, as previously described, generates payoff quotes 28 which are communicated to lenders 12 and loan servicers 14 via a user interface 45 supported by the network 10. Payoff quotes 28 include calculations of prepayment premiums due for a prematurely satisfied loan. For each loan, the payoff quote may differ depending on the loan terms (including the specified method of calculating the prepayment premium), current unpaid principal balance, and so on.
Payoff calculation logic 50 includes different payoff calculation algorithms for calculating different types of prepayment premiums. The determination of which payoff calculation algorithm is to be used may be determined manually or automatically. For example, based on a review of the loan agreement, an analyst at purchaser 18 may specify the algorithm to be used through a selection on suitable user interface screen. As another example, if an identification of the algorithm to be used is stored as part of the loan data for the loan, then payoff calculation logic 50 may automatically determine which algorithm to use based on a loan identification number or other suitable identifier. Payoff calculation logic 50 uses loan information entered through user interface 45 and/or retrieved from other sources to generate the payoff quotes for the loans.
Data processing system 16 includes a database 30 which stores all purchaser payoff quotes 28 therein for archival purposes. Purchaser 18 may then retrieve information from database 30 to access archived payoff quotes. Each quote that is generated may be indexed and tracked, e.g., using a suitable identification number that is generated when the payoff quote is generated. As another example, payoff quotes may be stored according to a loan identification number, a document number, loan type or any other information. The database may include database and access control logic (not shown) which provides the user security administration and control for each database. The database access and control logic also maintains referential integrity, processes queries and updates, and performs tasks related to access and control of the payoff quotes. The database 30 may utilize any type of software and hardware platforms including various operating systems, web servers, application servers and hardware.
Reporting logic 54 cooperates with servicing home page 13 and related tools. As previously indicated, the servicing home page 13 may provide an access portal for data processing system 16 where servicing-related operations may be performed. For example, servicers 14 may access servicing home page 13 to submit monthly payment information, to reconcile loan data and current loan balances, and so on. When payoff quotes are generated, the payment data received through such operations is used by the payoff calculation logic 50 to generate the payoff quote.
Data processing system 16 also includes user interface logic 47 which may include program logic for providing a lender interface 40, servicer interface 44 and/or investor interface 46. Lender interface 40 is provided for transferring loan information 24 to the data processing system 16. Servicer interface 44 and investor interface 46 enable servicers 14 and investors 20, respectively, to correspond with data processing system 16 via the network 10. A purchaser interface (not shown) may also be included in the user interface 45 to enable purchaser 18 to access and control data processing system 16. User interface 45 may be any type of interface enabling communication between system users and the data processing system 16. For example, user interface 45 may be a website which is implemented by web server 21 and which is accessible over the Internet. Any type of software code or logic (i.e., user interface generation logic) may be utilized to generate the user interface 45 (e.g., html). As another example, user interface may be a telephonic interface enabling users to obtain information over the telephone.
The following table provides additional examples of common data elements that may be obtained from the user:
The following table provides additional examples of other data elements that may be obtained from the user, depending on the type of loan:
The following table provides additional examples of other data elements that may be obtained from the user, if a waiver or Miscellaneous Fee is required:
Referring to
Referring now to
The following table provides additional examples of other data elements that may be displayed as output from the payoff calculator logic 50:
Referring now to
In one embodiment, the data processing system 16 includes document custodian logic (not shown) which interfaces with the data processing system 16 to retrieve archived documents from a storage facility or warehouse. Upon satisfaction of a loan, the originals of certain documents (e.g., the deed to the property) may be issued to the borrower/home owner. The originals of some documents can be stored in a document storage facility (or retention warehouse). If the loan on the property is satisfied title fully transfers to the borrower. Once payoff quotes are provided and accepted by a system the loan may be paid off in full. After the remaining balance on the loan is received by the lender the storage facility receives instruction to release the original documents. The documents are then sent to the lender in care of the borrower for transfer to the borrower. Thus, the process of releasing documents is integrated into the data processing system 16, thereby integrating the payoff quoting process, quote acceptance/loan payoff process, and custodial process into a more seamless workflow. In this way, the purchaser 18 may maintain a “clean” inventory of records, automatically releasing documents at the time of loan satisfaction.
A method of reporting loan payoff information includes receiving loan information regarding a loan. The loan information includes loan terms, interest rate, unpaid principal balance, and/or payoff premium information and/or any other parameter. The payoff quotes include a prepayment premium for an early satisfaction of a loan and a total payoff amount for the early satisfaction of the loan. The method also includes reporting payoff quotes via the Internet.
Web pages may display additional information regarding the loans and/or MBS. For example the user interfaces may output the purchaser/servicer name, purchaser/servicer user name, purchaser/servicer loan number, property name, maturity date, interest basis, interest rate, current interest rate, validated current interest rate, rate change frequency, net interest rate, loan number, expected payoff date, yield maintenance end date, unpaid principal balance at payoff, declining premium percentage, miscellaneous fees, payoff state, payoff quote identification number, apportionment of any fees/interest, daily (or “per diem”) interest, total declining premium amount, apportionment of declining premium amount, total yield maintenance amount, apportionment of total yield maintenance amount, etc. Data processing system 16 is compatible with printing systems to print out any information outputted by the system 16. Moreover, the graphical and textual representations of the user interfaces are printable.
The embodiments of the present invention have been described with reference to drawings. The drawings illustrate certain details of specific embodiments that implement the systems and methods and programs of the present invention. However, describing the invention with drawings should not be construed as imposing on the invention any limitations that may be present in the drawings. The present invention contemplates methods, systems and program products on any machine-readable media for accomplishing its operations. The embodiments of the present invention may be implemented using an existing computer processor, or by a special purpose computer processor incorporated for this or another purpose or by a hardwired system.
As noted above, embodiments within the scope of the present invention include program products comprising machine-readable media for carrying or having machine-executable instructions or data structures stored thereon. Such machine-readable media can be any available media that can be accessed by a general purpose or special purpose computer or other machine with a processor. By way of example, such machine-readable media can comprise RAM, ROM, EPROM, EEPROM, CD-ROM or other optical disk storage, magnetic disk storage or other magnetic storage devices, or any other medium which can be used to carry or store desired program code in the form of machine-executable instructions or data structures and which can be accessed by a general purpose or special purpose computer or other machine with a processor. When information is transferred or provided over a network 10 or another communications connection (either hardwired, wireless, or a combination of hardwired or wireless) to a machine, the machine properly views the connection as a machine-readable medium. Thus, any such a connection is properly termed a machine-readable medium. Combinations of the above are also included within the scope of machine-readable media. Machine-executable instructions comprise, for example, instructions and data which cause a general purpose computer, special purpose computer, or special purpose processing machines to perform a certain function or group of functions.
Embodiments of the present invention have been described in the general context of method steps which may be implemented in one embodiment by a program product including machine-executable instructions, such as program code, for example in the form of program modules executed by machines in networked environments. Generally, program modules include routines, programs, objects, components, data structures, etc. that perform particular tasks or implement particular abstract data types. Machine-executable instructions, associated data structures, and program modules represent examples of program code for executing steps of the methods disclosed herein. The particular sequence of such executable instructions or associated data structures represent examples of corresponding acts for implementing the functions described in such steps.
As previously indicated, embodiments of the present invention may be practiced in a networked environment using logical connections to one or more remote computers having processors. Those skilled in the art will appreciate that such network computing environments may encompass many types of computers, including personal computers, hand-held devices, multi-processor systems, microprocessor-based or programmable consumer electronics, network PCs, minicomputers, mainframe computers, and so on. Embodiments of the invention may also be practiced in distributed computing environments where tasks are performed by local and remote processing devices that are linked (either by hardwired links, wireless links, or by a combination of hardwired or wireless links) through a communications network. In a distributed computing environment, program modules may be located in both local and remote memory storage devices.
An exemplary system for implementing the overall system or portions of the invention might include a general purpose computing environment in the form of computers, including a processing unit, a system memory or database, and a system bus that couples various system components including the system memory to the processing unit. The database or system memory may include read only memory (ROM) and random access memory (RAM). The database may also include a magnetic hard disk drive for reading from and writing to a magnetic hard disk, a magnetic disk drive for reading from or writing to a removable magnetic disk, and an optical disk drive for reading from or writing to a removable optical disk such as a CD ROM or other optical media. The drives and their associated machine-readable media provide nonvolatile storage of machine-executable instructions, data structures, program modules and other data for the computer. It should also be noted that the word “terminal” as used herein is intended to encompass computer input and output devices. User interfaces, as described herein may include a computer with monitor, keyboard, a keypad, a mouse, joystick or other input devices performing a similar function.
It should be noted that although the diagrams herein may show a specific order and composition of method steps, it is understood that the order of these steps may differ from what is depicted. For example, two or more steps may be performed concurrently or with partial concurrence. Also, some method steps that are performed as discrete steps may be combined, steps being performed as a combined step may be separated into discrete steps, the sequence of certain processes may be reversed or otherwise varied, and the nature or number of discrete processes may be altered or varied. The order or sequence of any element or apparatus may be varied or substituted according to alternative embodiments. Accordingly, all such modifications are intended to be included within the scope of the present invention. Such variations will depend on the software and hardware systems chosen and on designer choice. It is understood that all such variations are within the scope of the invention. Likewise, software and web implementations of the present invention could be accomplished with standard programming techniques with rule based logic and other logic to accomplish the various database searching steps, correlation steps, comparison steps and decision steps.
The foregoing description of embodiments of the invention has been presented for purposes of illustration and description. It is not intended to be exhaustive or to limit the invention to the precise form disclosed, and modifications and variations are possible in light of the above teachings or may be acquired from practice of the invention. The embodiments were chosen and described in order to explain the principals of the invention and its practical application to enable one skilled in the art to utilize the invention in various embodiments and with various modifications as are suited to the particular use contemplated. Other substitutions, modifications, changes and omissions may be made in the design, operating conditions and arrangement of the embodiments without departing from the scope of the present invention.
It should also be apparent that it is also possible to construct data processing systems which do not incorporate the advantages described herein in connection with the data processing system 16, or which also incorporate additional advantages not described herein.
Throughout the specification, numerous advantages of the exemplary embodiments have been identified. It will be understood of course that it is possible to employ the teachings herein without necessarily achieving the same advantages. Additionally, although many features have been described in the context of a particular data processing unit, it will be appreciated that such features could also be implemented in the context of other hardware configurations. Further, although various figures depict a series of steps which are performed sequentially, the steps shown in such figures generally need not be performed in any particular order. For example, some of the steps may be performed essentially simultaneously. Additionally, some steps shown may be performed repetitively with particular ones of the steps being performed more frequently than others. Alternatively, it may be desirable in some situations to perform steps in a different order than shown.
While the exemplary embodiments illustrated in the figures and described above are presently preferred, it should be understood that these embodiments are offered by way of example only. Other embodiments may include, for example, structures with different data mapping or different data. The invention is not limited to a particular embodiment, but extends to various modifications, combinations, and permutations that nevertheless fall within the scope and spirit of the appended claims.
This application is a continuation of co-pending U.S. application Ser. No. 12/062,800, entitled “Loan Payoff Calculator System and Method” filed on Apr. 4, 2008, which claims the benefit of U.S. Prov. Ser. No. 60/922,050, entitled “Loan Payoff Calculator System and Method,” filed Apr. 5, 2007, hereby incorporated by reference in their entirety.
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| Number | Date | Country | |
|---|---|---|---|
| 60922050 | Apr 2007 | US |
| Number | Date | Country | |
|---|---|---|---|
| Parent | 12062800 | Apr 2008 | US |
| Child | 13620524 | US |
