Interactive mortgage and loan information and real-time trading system

United States Patent [w]

Fraser et al.

US005995947A [ii] Patent Number: 5,995,947 [45] Date of Patent: Nov. 30,1999

[54] INTERACTIVE MORTGAGE AND LOAN

INFORMATION AND REAL-TIME TRADING
SYSTEM

[75] Inventors: Stephen K. Fraser, Livermore;

Sadashiv Adiga, Hercules; Suresh
Payankannur, Richmond, all of Calif.

[73] Assignee: IMX Mortgage Exchange, San Ramon, Calif.

[21] Appl. No.: 08/928,559 [22] Filed: Sep. 12, 1997

[51] Int. C I. G06F 17/00

[52] U.S. CI 705/38; 705/35; 705/37;

395/233

[58] Field of Search 705/38, 35, 37;

395/200.33, 200.47, 200.57, 200.61, 200.49

[56] References Cited

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5,611,052 3/1997 Dykstra et al 705/38

OTHER PUBLICATIONS

XP002090668 Harker PT. et al Aug. 1996.
XP002090669 Meyer D.L. et al Apr. 1992.
XP002090670 Colby M. Apr. 1993.
XP002090671 Reinbach A. Nov. 1996.

Primary Examiner—-Thomas R. Peeso

Attorney, Agent, or Firm—Swernofsky Law Group

[57] 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.

38 Claims, 2 Drawing Sheets

1

INTERACTIVE MORTGAGE AND LOAN
INFORMATION AND REAL-TIME TRADING
SYSTEM

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 10 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 infor- 15 mation 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 20 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, 25 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 30 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 35 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 40 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 45 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 50 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 55 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 60 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. 65

Accordingly, it would be advantageous to provide a method and system for automating loan applications, such as

2

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