Mortgage abstract
The invention provides a method and system for trading loans in
real time by making loan applications, such as home mortgage loan
applications, and placing them up for bid by a plurality of potential
lenders. A transaction server maintains a database of pending loan
applications and their statuses; each party to the loan can search
and modify that database consistent with their role in the transaction,
by requests to the server from a client device identified with their
role. Brokers at a broker station can add loan applications, can
review the status of loan applications entered by that broker, are
notified of lender's bids on their loans, and can accept bids by
lenders. Lenders at a lender station can search the database for
particular desired types of loans, can sort selected loans by particular
desired criteria, can bid on loan applications, and are notified
when their bids are accepted. Broker stations, lender stations,
and the transaction server can be coupled using multiple access
methods, including internet, intranet, or dial-up or leased communication
lines.
Mortgage claims
We claim:
1. A method for processing loan applications, said method including
the steps of maintaining a database of pending loan applications
and their statuses at a database server, wherein each party to a
loan can search and modify that database consistent with their role
in the transaction by requests to said server from a client device
identified with their role.
2. A method as in claim 1, wherein said loan applications comprise
home mortgage loan applications.
3. A method as in claim 1, wherein said database can be modified
by entering bids on a loan application from one of a plurality of
potential lenders.
4. A method as in claim 1, wherein
said roles include a loan originator and said client device includes
a broker station associated with at least one said loan originator;
and
said loan originator can review the status of loan applications
entered by that loan originator, and can accept bids by lenders.
5. A method as in claim 4, wherein said loan originator is a broker,
loan processor, manager, or prospective borrower.
6. A method as in claim 4, wherein said loan originator is notified
of lender's bids on its loans.
7. A method as in claim 1, wherein
said roles include a lender and said client device includes a lender
station associated with at least one said lender; and
said lender can search the database for particular desired types
of loans, and can bid on loan applications.
8. A method as in claim 7, wherein said lender is notified when
its bid is accepted.
9. A method as in claim 1, wherein said database includes tags
for loans using identifiers which might be of interest to lenders.
10. A method as in claim 9, wherein said identifiers include a
property location, borrower credit information, or CRA qualification
for the property.
11. A method as in claim 1, wherein said database includes computed
values which might be of interest to lenders.
12. A method as in claim 11, wherein said computed values include
a credit score.
13. A method as in claim 1, wherein said database server provides
for detecting substantially identical loan applications originated
by the same broker, so as to prevent double applications for the
same borrower for the same property.
14. A method as in claim 1, wherein said database server provides
parties the capability for designating counterparties with whom
they wish not to conduct business.
15. A method as in claim 1, including the step of allowing lenders
to bid on pending loan applications without revealing their rates
or pricing strategies.
16. A method as in claim 1, including the step of authorizing each
loan originator in one or more of a plurality of authorization classes.
17. A method as in claim 16, wherein said authorization classes
form a hierarchy.
18. A method as in claim 1, including the step of prequalifying
prospective borrowers using statistical information about loan applications.
19. A system for processing loan applications, said system including
a database of pending loan applications, said database including
status information regarding said pending loan applications;
a transaction server, said transaction server being responsive
in real time to requests from parties to said pending loan applications,
said requests including requests for searching and requests for
modifying said database consistent with roles for said parties.
20. A system as in claim 19, including a client device associated
with each said party.
21. A system as in claim 19, wherein said pending loan applications
comprise home mortgage loan applications.
22. A system as in claim 19, wherein
said database includes a set of bids associated with each said
loan application; and
said transaction server responds to a new bid from one of a plurality
of potential lenders by entering said new bid with an associated
loan application.
23. A system as in claim 19, including a broker station associated
with at least one loan originator, wherein said broker station is
capable of reviewing the status of loan applications entered by
that loan originator, and is capable of accepting bids by lenders
for said loan applications entered by that loan originator.
24. A system as in claim 23, wherein said loan originator is a
broker, loan processor, manager, or prospective borrower.
25. A system as in claim 23, including a message notifying said
loan originator of said bids by lenders.
26. A system as in claim 19, including a lender station associated
with at least one said lender; wherein said lender station is capable
of requesting said transaction server to search said database for
particular desired types of loans, and is capable of submitting
bids on loan applications to said transaction server.
27. A system as in claim 26, including a message notifying said
lender when its bid is accepted.
28. A system as in claim 19, wherein said database includes tags
for loans using identifiers which might be of interest to lenders.
29. A system as in claim 28, wherein said identifiers include a
property location, borrower credit information, or CRA qualification
for the property.
30. A system as in claim 19, wherein said database includes computed
values which might be of interest to lenders.
31. A system as in claim 30, wherein said computed values include
a credit score.
32. A system as in claim 19, wherein said transaction server is
capable of detecting substantially identical loan applications originated
by the same broker, whereby double applications for the same borrower
for the same property are substantially prevented.
33. A system as in claim 19, wherein said transaction server responds
to requests by brokers designating selected lenders with whom they
wish not to conduct business.
34. A system as in claim 19, wherein said transaction server responds
to requests by lenders designating selected brokers with whom they
wish not to conduct business.
35. A system as in claim 19, wherein said transaction server responds
to bids from lenders without revealing their rates or pricing strategies.
36. A system as in claim 19, wherein said transaction server includes
means for authorizing each loan originator in one or more of a plurality
of authorization classes.
37. A system as in claim 36, wherein said authorization classes
form a hierarchy.
38. A system as in claim 19, including means for prequalifying
prospective borrowers using statistical information about loan applications.
Mortgage description
BACKGROUND OF THE INVENTION
1. Field of the Invention
The invention relates to an interactive mortgage and loan information
and real-time trading system.
2. Related Art
In the art of mortgage loans and mortgage brokering, a relatively
large amount of information must be exchanged to conduct a loan
transaction, such as a new home mortgage loan. In attempting to
obtain a competitive loan for the borrower, or in attempting to
maintain competitive rates for lenders to offer loans, this relatively
large amount of information must be collected, compared, evaluated,
and disseminated to possible counterparties to the transaction.
The major parties include the borrower (and/or an agent such as
a mortgage broker) and the lender; other parties can include appraisal
agents, regulatory agencies, mortgage insurance companies, and secondary
mortgage market participants.
In known practices, nearly all the information relating to a loan
transaction is collected by hand, transmitted using paper applications,
compared by human beings (whose responsibilities include loan evaluation,
property appraisal, financial market evaluation, and setting of
lending rates), and disseminated using paper "rate sheets"
or similar advertising material. For example, a mortgage broker
attempting to obtain a loan for a borrower might be required to
interview that client, consult rate sheets from multiple lenders
to determine appropriate lending programs which might be appropriate
for that client, submit multiple applications (possibly on multiple
different forms) to selected ones of those lenders, and await action
on those applications before being able to advise that client. Similarly,
a lender attempting to set lending rates might be required to examine
the present interest rate market, determine the mix of qualified
borrowers likely to apply, determine a set of lending programs and
lending rates best suited to the market and the risk the lender
is willing to bear, and periodically post rate sheets or similar
advertising material to multiple mortgage brokers informing them
of those lending programs and lending rates. Upon receiving a loan
application, the lender might also be required to independently
evaluate the creditworthiness of the borrower and the value of the
underlying property.
As all of these operations are presently performed by hand, initiating
loan transactions is relatively expensive. Although some forms of
automation are known, such as uniform credit scoring for loan applications
and automatic generation of loan application documents, there are
no known systems in the field of mortgage lending for providing
relatively automatic and widespread dissemination of loan application
information or lending program information for automated comparison
in real time. The fact that these operations are performed by hand,
rather than with the aid of computer processing, also limits the
flexibility of the parties to the transaction. For borrowers, it
is relatively difficult to compare more than a relatively few lending
programs. For lenders, it is relatively difficult to select anything
but a relatively simple set of lending categories for prospective
borrowers. It is also practically impossible for lenders to experiment
with new products without broadcasting knowledge of those new products
to a wide population, including their competitors.
Accordingly, it would be advantageous to provide a method and system
for automating loan applications, such as home mortgage loan applications,
placing them up for bid by a plurality of potential lenders, and
following those loans using a technique for managing such loan applications
and bids. This advantage is achieved in an embodiment of the invention
in which a database server maintains a database of pending loan
applications and their statuses; each party to the loan can search
and modify that database consistent with their role in the transaction,
by requests to the server from a client device identified with their
role.
SUMMARY OF INVENTION
The invention provides a method and system for trading loans in
real time by making loan applications, such as home mortgage loan
applications, and placing them up for bid by a plurality of potential
lenders. A transaction server maintains a database of pending loan
applications and their statuses; each party to the loan can search
and modify that database consistent with their role in the transaction,
by requests to the server from a client device identified with their
role.
In a preferred embodiment, brokers at a broker station can add
loan applications, can review the status of loan applications entered
by that broker, are notified of lender's bids on their loans, and
can accept bids by lenders. Lenders at a lender station can search
the database for particular desired types of loans, can sort selected
loans by particular desired criteria, can bid on loan applications,
and are notified when their bids are accepted. Broker stations,
lender stations, and the transaction server can be coupled using
multiple access methods, including internet, intranet, or dial-up
or leased communication lines.
The transaction server marks prospective loans in its database
by a variety of identifiers which might be of interest to lenders,
including a loan amount, property location, property appraisal,
borrower credit information, and potential CRA qualification for
the property. The transaction server computes information about
prospective loans which might be of interest to lenders, such as
loan-to-value ratios, qualifying credit scores, and income classification
for potential CRA qualification of the loan. The transaction server
provides exogenous information which might be of interest to lenders
and brokers for pricing loans, such as public bond market and other
interest rate market news, as well as computed information regarding
the pool of loans, such as current and past low, average, and high
rates for a variety of loans traded using the system.
In a preferred embodiment, the transaction server provides for
detecting substantially identical loan applications originated by
the same broker, so as to prevent double applications for the same
borrower, and also provides brokers and lenders each the capability
for designating counterparties with whom they wish not to conduct
business. The transaction server is also supported by administration
client/server devices for maintaining consistency and integrity
of the transactions and relationships between parties.
BRIEF DESCRIPTION OF THE DRAWINGS
FIG. 1 shows a block diagram of an interactive mortgage and loan
information and real-time trading system.
FIG. 2 shows a process flow diagram of operation of an interactive
mortgage and loan information and real-time trading system.
DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT
In the following description, a preferred embodiment of the invention
is described with regard to preferred process steps and data structures.
Those skilled in the art would recognize after perusal of this application
that embodiments of the invention can be implemented using general
purpose switching processors or special purpose switching processors
or other circuits adapted to particular process steps and data structures
described herein, and that implementation of the process steps and
data structures described herein would not require undue experimentation
or further invention.
System Architecture
FIG. 1 shows a block diagram of an interactive mortgage and loan
information and real-time trading system.
An interactive mortgage and loan information and trading system
100 includes a transaction server 110, a set of broker stations
120, a set of lender stations 130, an administration client 150,
a set of system monitor stations 160, a web server 170, and a communication
network 140.
(1) Transaction Server
The transaction server 110 comprises a device or set of devices
coupled to the network 140, such as a general purpose processor
operating under control of operating system and application software,
and disposed to respond to messages from the broker stations 120,
the lender stations 130, and the system monitor stations 160, as
described herein. In a preferred embodiment, the transaction server
110 can comprise a Unix server such as a Sun UltraSparc processor
operating under control of the Solaris operating system.
The transaction server 110 includes a trading system database 111,
a geographic database 112, and a set of external interfaces 113.
The transaction server 110 enters loan profiles into the trading
system database 111 in response to requests from the broker stations
120, searches the trading system database 111 in response to requests
from the lender stations 130, and modifies the trading system database
111 in response to changes in status for loan profiles stored therein.
The trading system database 111 includes loan profiles and other
information needed to support trading operations for loans, stored
in a relational database accessed using a database server module.
In a preferred embodiment, the relational database comprises an
Oracle database, but in alternative embodiments the relational database
may comprise another type of relational database, such as a Sybase
database, or may comprise an object-oriented database or another
type of database structure.
The trading system database 111 includes information regarding
each loan application and its status. Each loan application includes
a loan profile, which comprises information about the prospective
loan, a set of bids, each of which comprises an offer to make the
loan from a particular lender, and a set of status information,
which relates to the processing of the loan application using the
system 100.
In a preferred embodiment, at least the following information is
included for each loan profile:
information about the loan, including--loan category (FHLMC, FNMA,
Conduit, VA, FHA, or Other); loan amount; loan type, such as adjustable
or fixed interest rate; loan duration
information about the underlying property, including--property
type, such as SFR (single family residence), 2 units, 3 units, or
4 units; property location, by street address, city, county, and
state; seller's asking price; appraised value information about
the borrower, including--income and assets, credit history, and
any negative information about the borrower (such as bankruptcy
filings or debt discharge dates, reports of late mortgage payments)
The transaction server 110 computes some information for each loan
application which might be of interest to lenders and enters that
information in the trading system database 111 when the loan profile
itself is entered.
In a preferred embodiment, this computed information includes:
computed information about the loan, including--LTV (loan to value),
CLTV (combined loan to value); debt ratios (Front ratio and Back
ratio)
computed information about the property, including its census tract,
its MSA (Metropolitan Statistical Area); its qualification as being
in an area with majority population belonging to ethnic minorities;
the income classification for its MSA
computed information about the borrower, including--combined income
and combined debt for multiple borrowers; qualifying credit score;
CRA qualification for the loan (responsive to the borrower's income,
the median income for the property's census tract, and the median
income for the property's MSA)
The geographic database 112 includes a geocoded database accessed
using a geographic database module. In a preferred embodiment, the
geocoded database relates each property address to its corresponding
census tract, and comprises information relating to each census
tract, such as median income, used for computing possible CRA qualification
for the loan. The transaction server 110 reads the geographic database
112 to determine information relating to the property.
The external interfaces 113 include communication links to exogenous
information and services, using the network 140 or other direct
links. The transaction server 110 uses the external interfaces 113
to obtain information relating to the interest rate markets, the
borrower, or the property.
In a preferred embodiment, these exogenous information and services
include:
credit agencies and credit information provided by them
desktop underwriting systems
MIDEX
loan processing systems
real estate appraisal systems
mortgage insurance agencies and mortgage scores provided by them
information sources for public market and other news, including--real
time quotes for 10 year Treasury notes, 30 year Treasury bonds,
DJIA (Dow Jones Industrial Average), and NSDQ (National Securities
Dealers Quotes)
In a preferred embodiment, the transaction server 110 includes
a set of program modules. Each module is a set of software objects
and/or program elements, collectively having the ability to execute
independently in a separate thread or logical chain of process execution.
Each module can be executed as a separate logical server or using
a separate physical device. However, for clients such as the broker
stations 120, the lender stations 130, and the administrative stations
150, the transaction server 110 operates as a single logical server
available using the network 140.
In a preferred embodiment, the transaction server 110 includes
the following program modules:
login module--This module is responsible for password checking,
access control, and assignment of a particular program module to
service the client. Each broker station 120 is serviced by a broker
module, each lender station 130 is serviced by a lender module,
and each administration station 150 is serviced by an administration
module.
In a preferred embodiment, the login module also implements a load
management policy so as to distribute computing tasks among different
server devices on the network 140.
broker module--This module handles all server-side application
requirements of the broker station 120.
lender module--This module handles all server-side application
requirements of the lender station 130.
administration module--This module handles all server-side application
requirements of the administration station 150.
external interface modules--Each interface to an external loan
origination package or loan documentation package coupleable to
the transaction server 110 has its own corresponding external interface
module, for converting incoming data to a format for communication
with the respective application module or database (most interfaces
require only one way communication to receive data from an external
package).
external service modules--Each external service has a module for
communicating with that external service and for obtaining information
in a format required by the external service. For example, one of
the external service modules would be used to obtain credit scores
and reports from credit reporting agencies (most external services
require two way communication with an external agent or process).
notification module--This module handles notification and electronic
mail communication with the broker stations 120 and the lender stations
130.
database interface module--This module handles all interface requirements
between application modules and the databases. For example, the
database interface module manages (a) the number of simultaneous
connections to the database such that the total number is maintained
within applicable license agreements; and (b) any integrity problems
in interactions between application modules and the databases. Thus,
this module allows the Transaction Server to be connected to different
types of databases such as relational databases or object-oriented
databases.
geoserver module--This module receives the address sent to the
transaction server 110, performs a query to the geographic database
for any matches, evaluates any matches and prepares a query response
to the broker station 120.
monitoring module--This module manages resource usage by other
modules and by the entire system.
system module--This module includes a collection of data objects
and program elements for utility tasks such as printing, reporting,
and audit trails.
trading system database 111--This database includes loan profile
data from the broker stations 120, computed data for those loan
profiles, and other relevant data needed to support real-time trading
(such as user profiles and access permission information).
geographical database 112--This database includes data based on
that published by the U.S. Census Bureau and the U.S. Postal Service
ZIP +4 directory files.
In a preferred embodiment, the transaction server 110 can configure
its program modules and change operating parameters dynamically
while the system 100 is operating, by editing selected files having
operating parameters used during operation of the system 100. Thus,
additional devices can be added into the network 140 to meet resource
requirements of the system 100.
(2) Broker Stations
Each of the broker stations 120 comprises a device or set of devices
coupled to the network 140, such as a general purpose processor
operating under control of operating system and application software,
and disposed to enter and process loan profiles, as described herein.
In a preferred embodiment, one of the broker stations 120 can comprise
a PC workstation such as an Intel Pentium processor operating under
control of the Microsoft Windows 95 operating system.
The broker station 120 operates under control of broker client
software, which interacts using the network 140 with the transaction
server 10 as described herein. The broker station 120 includes information
input devices, such as a keyboard and mouse or other pointing device,
and information output and presentation devices, such as a monitor
and printer.
As used herein, the term "broker" includes any person
or entity fulfilling a role as a loan originator, not necessarily
a loan broker or a mortgage broker. For example, the broker stations
120 could be used directly by prospective borrowers, by cooperatives
thereof, or by certain classes of loan officers at lending institutions.
A brokerage organization can use the broker station 120 so as to
coordinate with the brokerage's organizational structure. For example,
a loan processor or a manager can enter and view loans on behalf
of one or more brokers, either individually or simultaneously in
one screen display. Typically, a loan processor would act on behalf
of a small number of selected brokers, while a manager would act
on behalf of all brokers possibly including himself or herself.
A broker uses the broker station 120 to transmit loan profiles
to the transaction server 110 (thus entering those loan profiles
into the system 100 for processing), to review the status of those
loan profiles as they are processed by the system 100, to receive
notification of bids on those loan profiles by lenders, to review
bids by lenders, to accept or decline bids by lenders, and to communicate
with other users of the system 100.
In a preferred embodiment, the broker station 120 makes connections
to the transaction server 110 using the network 140 on an as-needed
basis, so as to send messages to the transaction server 110 without
excessive use of the network 140. Thus, when the broker station
120 has a loan profile to transfer to the transaction server 110,
the broker station 120 makes the connection to the transaction server
110 using the network 140 at that time, rather than maintaining
a connection to the transaction server 110 while the broker is composing
or editing the loan profile information.
The broker station 120 can also receive asynchronous communications
from the transaction server 110, such as in the event there are
urgent communications or other information of immediate interest
to the broker. For example, the broker can request the transaction
server 110 to transmit messages to the broker station 120 whenever
any loan profile receives a bid having specified criteria (the broker
can set these criteria, or can request notification of all bids
or of none). The broker station 120 can also receive electronic
mail messages from other users of the system 100, including other
brokers, lenders, or other parties.
The transaction server 110 can also broadcast events of interest
to all broker stations 120, lender stations 130, other parties,
or selected ones thereof.
In a preferred embodiment, the broker station 120 includes a software
interface to an existing loan package software element, so that
brokers can use that existing loan package software element to prepare
loan profiles and transmit those loan profiles to the transaction
server 110.
(3) Lender Stations
Each of the lender stations 130 comprises a device or set of devices
coupled to the network 140, such as a general purpose processor
operating under control of operating system and application software,
and disposed to process loan profiles, as described herein. In a
preferred embodiment, one of the lender stations 130 can comprise
a PC workstation such as an Intel Pentium processor operating under
control of the Microsoft Windows 95 operating system.
The lender station 130 operates under control of lender client
software, which interacts using the network 140 with the transaction
server 110 as described herein. The lender station 130 includes
information input devices, such as a keyboard and mouse or other
pointing device, and information output and presentation devices,
such as a monitor and printer.
As used herein, the term "lender" includes any person
or entity fulfilling a role as a loan maker or loan purchaser, not
necessarily an actual lending institution or officer thereof.
A lender uses the lender station 130 to search the database for
particular desired types of loans, to sort selected loans by particular
desired criteria, to bid on loan applications, and to be notified
when their bids are accepted. The lender at the lender station 130
can construct and store its own particular desired criteria, and
retrieve and reuse those stored criteria. The lender at the lender
station 130 can also direct the transaction server 110 to actively
search for its own particular desired criteria, and to notify the
lender at the lender station 130 when any loans matching those criteria
appear in the trading system database 111.
In a preferred embodiment, similar to the broker station 120, the
lender station 130 makes connections to the transaction server 110
using the network 140 on an as-needed basis, so as to send messages
to the transaction server 110 without excessive use of the network
140.
Similar to the broker station 120, the lender station 130 can also
receive asynchronous communications from the transaction server
110, such as in the event there are urgent communications or other
information of immediate interest to the lender. Also similar to
the broker station 120, the lender station 130 can also receive
electronic mail messages from other users of the system 100, including
brokers, other lenders, or other parties.
Similar to the broker station 120, the lender broker station 130
includes a software interface to an existing desktop underwriting
software element, so that lenders can use that existing desktop
underwriting software element to review loan profiles and decide
whether or not to bid on those loan profiles.
(4) Administration Station
The administration client 150 comprises a device or set of devices
coupled to the network 140, such as a general purpose processor
operating under control of operating system and application software,
and disposed to process loan profiles, as described herein. In a
preferred embodiment, the administration client 150 can comprise
a PC workstation such as an Intel Pentium processor operating under
control of the Microsoft Windows 95 operating system, or can comprise
software operating on a processor used for the transaction server
110.
The administration client 150 operates under control of administration
client software, which interacts using the network 140 with the
transaction server 110 as described herein. The administration client
150 includes information input devices, such as a keyboard and mouse
or other pointing device, and information output and presentation
devices, such as a monitor and printer.
As used herein, the term "administrator" includes any
person or entity fulfilling a role as an administrator of the system
100, not necessarily an official of any entity associated with administration
or maintenance of the system 100.
An administrator uses the administration client 150 to monitor
operation of the system 100, to generate reports on operation of
the system 100, and to be notified of any alertable conditions of
the system 100.
Information is collected by the administration client 150 and stored
in the system 100 and used in support of trading, including the
following:
personal and organizational information about the parties (both
brokers and lenders), including--organizational affiliation, address
and telephone number for contact, delivery information, electronic
mail address
information about changes in relationship between any parties,
including when a loan processor or lender representative enters
or leaves any selected broker or lender organization
This information is transmitted to the transaction server 110 so
as to ensure integrity of trading operations. For example, the transaction
server 110 can enable or disable passwords at appropriate times,
and can track any loans affiliated with the parties after their
change in organizational affiliation.
modification of a selected loan profile at the request of a broker
client 120
Information is available to the administrator at the administration
client 150 information regarding performance of the system 100,
including the following:
number of brokers using the system 100
number of lenders using the system 100
number of loan profiles processed over a specified period of time
number of loan profiles stored in the trading system database 111
In a preferred embodiment, similar to the broker station 120, the
administration client 150 makes connections to the transaction server
110 using the network 140 on an as-needed basis, so as to send messages
to the transaction server 110 without excessive use of the network
140.
Similar to the broker station 120, the administration client 150
can also receive asynchronous communications from the transaction
server 110, such as in the event there are urgent communications
or other information of immediate interest to the administrator.
Also similar to the broker station 120, the administration client
150 can also receive electronic mail messages from other users of
the system 100, including brokers, lenders, or other parties.
(5) System Monitor Station
A set of system monitor stations 160 are coupled to the network
140 for remotely monitoring and controlling the state and usage
of the transaction server 110. An operator using one or more of
the system monitor stations 160 is capable of starting or stopping
one of the program modules of the transaction server 110 or other
components of the system 100. Each system monitor stations 160 provides
visual display of the state and usage of the transaction server
110, selected ones of its program modules, and the network 140.
(6) Web Server
A web server 170 is coupled to the network 140 for maintaining
and serving documents and other information used by brokers at the
broker stations 120, lenders at the lender stations 130, and administrators
at the administrator stations 150. In a preferred embodiment, the
web server 170 includes the following information:
due diligence information on brokers and lenders, made available
only to authorized persons for review;
loan documents deposited by brokers or lenders, to be forwarded
or transmitted only to authorized persons;
rules, regulations, and procedures for trading using the system
100, made available to all authorized persons
(7) Other System Elements
The network 140 provides for communication between the transaction
server 110, the broker station 120, the lender station 130, and
the administration station 150, using messages as described herein
and message protocols appropriate to transmission and reception
of those messages. The network 140 includes a WAN (wide area network)
such as the "Advantis" network available from IBM Corporation
of Armonk, N.Y. However, in alternative embodiments, the network
140 may use internet, intranet, dial-up telephone lines or leased
communication lines, or some combination thereof. In a preferred
embodiment, the network 140 uses duplicate communication lines between
nodes, and provides for automated failover transparent to users.
In a preferred embodiment, messages transmitted using the network
are encrypted or use digital signatures or other security measures
to verify their source and to assure that they are not tapped or
forged by intruders.
System Operation
FIG. 2 shows a process flow diagram of operation of an interactive
mortgage and loan information and real-time trading system.
A method 200 of operation of the system 100 includes a plurality
of flow points and process steps as described herein.
At a flow point 210, a prospective borrower desires to obtain a
home mortgage loan or similar loan.
At a step 221, the borrower transmits prospective loan information
regarding a prospective loan application to a mortgage broker, loan
broker, or similar agent. In a preferred embodiment, the prospective
loan information can be transmitted using an industry standard form
for prospective loan information, such as a Form 1003 or Form 1008.
The prospective loan information can also be transmitted using a
computer file prepared using an existing loan documentation or origination
software package.
At a step 222, the broker at the broker station 120 logs in to
the transaction server 110 and verifies that the broker station
120 is authorized to access the system 100. In this step, the transaction
server 110 transmits any access control data or other data needed
to initialize the broker station 120 so as to customize it for access
by that individual broker, loan processor, or broker manager.
The broker can perform one of a set of functions using the broker
station 120, including the following:
managing loan profiles, including--creating a loan profile and
adding it to the trading system database 111; reviewing a loan profile
already in the trading system database 111; altering or otherwise
updating a loan profile already in the trading system database 111
managing loan portfolios, including--searching pending loan profiles
for those with or without bids, or for those with accepted bids
managing bids on loans, including--viewing bids on loan profiles,
accepting bids, viewing accepted bids
viewing market information, including--viewing real time market
data, viewing other mortgage news feeds or other news feeds
prequalifying borrowers, including viewing interest rates available
on the system 100, such as the average interest rate, high interest
rate, low interest rate, or median interest rate associated with
selected loan profile information; viewing aggregate interest rates
for the entire system 100; viewing lender activity in terms of number
of lenders who have purchased selected types of loans
managing lender selection, including--deselecting particular lenders
so that those lenders do not see loan profiles from this broker
station 120; reselecting particular lenders
communicating with other users of the system 100, including--electronic
mail messages; paging
password management, including--password changes
In a preferred embodiment, the system 100 allows hierarchical management
of loans from the perspective of the loan originator. A loan processor
is allowed to perform these functions on behalf of one or more selected
brokers, but is not allowed to post a loan on the loan processor's
own behalf. Brokers can delegate authority to loan processors to
post loans, and can exclude or include authority to accept bids
with that delegation of authority. A selected broker manager is
allowed to perform these functions as well as to post loans on the
manager's own behalf. Authorization as a broker, loan processor,
or manager is performed in the step 222 during login.
At a step 223, the broker at the broker station 120 interactively
enters data for the loan profile, optionally periodically or intermittently
save that data, optionally edits that data, optionally validates
that data for reasonable values at the broker station 120, and when
complete, prepares to transmit the completed loan profile to the
transaction server 110.
At a step 224, the broker at the broker station 120 optionally
reviews financial market information and mortgage market information
relevant to the loan profile. This allows the broker to set competitive
asking prices for loan profiles.
At a step 225, the broker at the broker station 120 sets a selected
asking price for the loan profile.
At a step 226, the broker station 120 transmits a loan profile
to the transaction server 110. The loan profile includes the prospective
loan information, but the transaction server 110 does not identify
the borrower or the broker to prospective lenders.
At a step 227, the transaction server 110 validates the information
provided for each loan profile, such as determining whether there
is in fact a property at the indicated property location and whether
there is in fact a property of the indicated property type at the
indicated property location. If the transaction server 110 deter
mines that the information provided for the loan profile is not
valid (to more than a trivial extent), the transaction server 110
responds to the broker station 120 by requesting correction.
As part of the step 227, the transaction server 110 or the broker
station 120 can transform certain data entry values so as to make
it convenient for the broker to enter data. For example, for loan
amount, the transaction server 110 or the broker station 120 can
accept the value "300K" and transform that to the value
"300,000".
Also as part of the step 227, the transaction server 110 provides
for detecting substantially identical loan profiles originated by
the same broker station 120, so as to prevent multiple applications
for the same borrower for the same property; this practice is sometimes
known as "double apping".
At a step 228, the transaction server 110 computes any computed
information for the loan profile (including determining whether
the loan profile is CRA eligible) and stores the loan profile in
the trading system database 111.
At a step 229, the transaction server 110 computes aggregate tags
for the loan profile so as to respond to specialized lender queries,
such as whether the loan profile is for a "prime" loan
or a "subprime" loan or whether the loan profile is CRA
eligible), and stores that information in the loan profile in the
trading system database 111.
At a flow point 230, a prospective lender desires to bid on one
or more loan applications.
At a step 241, the lender at the lender station 130 logs in to
the transaction server 110 and verifies that the lender station
130 is authorized to access the system 100.
In a preferred embodiment, selected lenders are allowed to access
selected categories of loan profiles depending on the nature of
their membership or privileges granted to them when signing up for
using the system 100. For example, selected portions of the lender's
ability to query the trading system database 111 can depend on the
level of service the lender requested when signing up for the system
100. As part of the step 241, this information is transmitted by
the transaction server 110 to the lender station 130 upon verification
of the lender station 130.
The lender can perform one of a set of functions using the lender
station 130, including the following:
managing loan profile searches, including--defining loan profile
searches, storing loan profile searches for later use or reuse,
directing the transaction server 110 to perform a loan profile search
Loan profile searches can specify that the loan profile can be
considered for community investment purposes or is CRA qualified.
Loan profile searches can also be specified to be "active,"
in which the transaction server 110 is directed to periodically
perform the loan profile search on updated contents of the trading
system database 111, and to notify the lender station 130 of revised
results of the active loan profile search.
managing search results, including--viewing results of a loan profile
search
managing bids on loans, including--placing bids on loan profiles,
receiving notification of accepted bids
The transaction server 110 provides limited information to this
particular lender station 130 on bids placed by other lender stations
130. In the case that this particular lender station 130 had the
winning bid, the next best bid is provided for display; in the case
that this particular lender station 130 had its bid rejected, the
winning bid is provided for display.
managing loan portfolios, including--searching loan profiles for
accepted bids;
searching loan profiles for selected status of loan processing;
viewing particular loan profiles for bid or processing status
viewing market information, including--viewing real time market
data, viewing other mortgage news feeds or other news feeds
managing broker selection, including--deselecting particular brokers
so that loan profiles from those brokers are not found by loan profile
searches from this lender station 130; reselecting particular brokers;
viewing due diligence information on particular brokers
communicating with other users of the system 100, including--electronic
mail messages; paging
password management, including--password changes
At a step 242, the lender at the lender station 130 determines
a query profile for querying the database, depending on the loan
programs available to the lender at that time. In a preferred embodiment,
the lender station 130 optionally stores the query profiles, so
that the lender can optionally use or modify a query profile for
reuse.
At a step 243, the lender at the lender station 130 transmits a
database query to the transaction server, requesting loan profiles
regarding prospective loans which might be of interest to the lender.
As part of the query, the lender can choose to retrieve only those
loans on which the lender has not already bid, or to retrieve all
such loans regardless of their bid status.
Although the lender is not informed of the identity of the borrower,
the lender can query for searchable database elements relating to
the borrower. For example, the lender can search on criteria such
as the following:
loan category (FHLMC, FNMA, Conduit, VA, FHA, Other); loan type
(adjustable or fixed interest rate); amortization time; loan purpose
(new purchase, improvement); occupancy status
calculated credit information for the loan, such as a LTV (loan
to value) ratio, a qualifying credit score, front and back ratios,
loan lock period, a total loan amount, whether the loan is "conforming"
particular qualifying credit information regarding the borrower,
such as gross family income, other outstanding debts, or credit
history reports
particular credit information regarding the property, such as its
nature (raw land, condominium, detached single family home, apartment
less than four units, income property), its location (census tract,
zip code, city, county, state), and whether it qualifies for CRA
(Community Reinvestment Act) credit for the lender
particular credit information regarding the broker, such as a history
of loan qualification or loan performance for loans originating
with that broker
At a step 244, the transaction server 110 performs a database lookup
for the trading system database 111 in response to the database
query, and transmits a query response to the lender station 130.
The query response identifies loan profiles which match the database
query.
At a step 245, the transaction server 110 transmits information
regarding loan profiles matching the query to the lender station
130. In a preferred embodiment, loans already bid upon by the lender
are so marked, such as by being displayed in a different color.
At a step 246, the lender at the lender station 130 can view details
of the loan profile interactively. In a preferred embodiment, the
lender's attention is drawn by marking selected loan profiles, such
as by being displayed in a different color. Selected loan profiles
can include those having comments regarding the nature of the property
or qualifying qualitative remarks.
At a step 247, the lender at the lender station 130 optionally
reviews the lender's portfolio of those loans with accepted or rejected
bids and those loans waiting for responses from brokers at broker
stations 120. The lender at the lender station 130 optionally reviews
the lender's bids declined by brokers at broker stations 120 against
winning bids, and optionally reviews the lender's winning bids against
others' bids declined by brokers at broker stations 120. The lender
at the lender station 130 optionally reviews market performance,
including activity in the system 100.
At a step 248, the lender at the lender station 130 selects a loan
profile for bid and optionally requests details of that selected
loan profile; in response, the transaction server 110 transmits
details about the loan profiles to the lender station 130.
At a step 249, the lender at the lender station 130 transmits a
bid on one of the loan profiles. The transaction server 110 enters
the bid in the loan profile, indicating that the lender has bid
on the loan profile, but does not identify the lender to prospective
borrowers or brokers.
The bid can have an associated expiration time, after which the
transaction server 110 will mark the bid withdrawn (or delete it),
so that it can no longer be accepted.
In a preferred embodiment, the lender at the lender station 130
can post a single common bid for multiple loan profiles.
At a step 250, the transaction server 110 transmits a bid notification
to each broker station 120 associated with a loan profile which
has received a bid. The bid notification can include one or more
of the following: (a) a bid alert on a display at the broker station
120, (b) a pager notification to the broker; (c) an electronic mail
message to the broker station 120.
At a flow point 260, a prospective borrower desires to accept a
bid on a loan application.
At a step 271, the broker at the broker station 120 logs in to
the transaction server 110 and verifies that the broker station
120 is authorized to access the system 100 and is authorized to
accept bids for that broker.
At a step 272, the broker at the broker station 120 optionally
reviews the broker's portfolio of those loans with accepted bids,
those loans with pending unaccepted bids, and those loans waiting
for bids from lenders at lender stations 130. The broker at the
lender station 130 optionally reviews market performance, including
activity in the system 100.
At a step 273, the broker at the broker station 120 selects a loan
profile with pending unaccepted bids and optionally requests details
of that selected loan profile; in response, the transaction server
110 transmits details about the loan profiles to the broker station
120. The broker at the broker station 120 selects one or more pending
bids for that loan profile and optionally requests details about
those bids; in response, the transaction server 110 transmits details
about the pending bids to the broker station 120.
At a step 274, the broker station 120 transmits an acceptance,
for a particular bid for a particular loan profile, to the transaction
server 110. The transaction server 110 marks that bid at the loan
profile as having been accepted, and marks all other bids at the
loan profile as having been rejected.
At a step 275, the transaction server 110 notifies the winning
bidder lender of the bid acceptance.
At a step 276, the transaction server 110 transmits complete prospective
loan information to the lender at the lender station 130 and complete
lender information to the broker at the broker station 120, thus
informing the borrower of the identity of the lender and informing
the lender of the identity of the borrower.
Although the lender at the lender station 130 is not informed of
the identity of the broker associated with the loan profile until
the bid is accepted, the lender at the lender station 130 can select
broker stations 120 for identification as being undesirable, so
that loan profiles from those broker stations 120 are not transmitted
in the query response. Similarly, although the broker at the broker
station 120 is not informed of the identity of the lender associated
with the bid, the broker at the broker station 120 can select lender
stations 130 for identification as being undesirable, so that bids
from those lender stations 130 are not displayed in the loan profile
(and the broker station 120 is not notified of receipt of bids from
those lender stations 130).
At a step 277, the broker transmits, either on paper or by EDI
(electronic data interchange), a complete loan application package
in a format acceptable to the particular lender. After verification
of the prospective loan information or other formalities, the lender
completes the loan.
The broker at the broker station 120 can also prequalify prospective
borrowers or a prospective loan profile so as to determine feasibility
for a particular loan or a particular loan amount.
At a flow point 280, a broker desires to prequalify a prospective
borrower.
At a step 291, the broker at the broker station 120 logs in to
the transaction server 110 and verifies that the broker station
120 is authorized to access the system 100.
At a step 292, the transaction server 110 transmits to the broker
station 120, and the broker station 120 initializes, search criteria
for prequalification with a set of loan products available from
lenders at lender stations 130 or otherwise tradeable on the system
100.
At a step 293, the broker at the broker station 120 enters preliminary
information regarding the prospective borrower, such as--expected
credit score, and expected front ratio, back ratio, and LTV ratio.
The broker at the broker station 120 can enter information regarding
points or rates, and obtain current and past corresponding points
or rates; for example, the broker at the broker station 120 can
enter a selected interest rate and obtain the average, high, and
low values for points corresponding to that interest rate for completed
loan transactions on the system 100. The broker at the broker station
120 can also determine statistics regarding how many lenders have
made loans of those types.
At a step 294, the broker at the broker station 120 can inform
the prospective borrower about whether or not it is feasible to
obtain competitive rates in those contemplated ranges.
The transaction server 110 records information regarding pending
loan profiles and completed loans for later monitoring and reporting
by the administrative client 150. In a preferred embodiment, this
information includes at least the following:
an audit trail of all actions taken with regard to each particular
loan profile, including all transaction data associated with the
loan profile for future verification
a record of loan performance for loan profiles which have been
processed using the system 100, including a database of loan performance
searchable by various criteria
In a preferred embodiment, the borrower and the lender are each
charged a fee for the service provided by the transaction server.
The fee is paid out of escrow funds by a selected escrow company
when the loan and an associated purchase of the property are completed.
The amount of the fee can be fixed or can be varied in response
to the prospective loan information, such as the amount of the loan,
and in a preferred embodiment is varied in response to CRA qualification
for the loan.
Alternative Embodiments
Although preferred embodiments are disclosed herein, many variations
are possible which remain within the concept, scope, and spirit
of the invention, and these variations would become clear to those
skilled in the art after perusal of this application. |