Patent ID: 7533057
Filing Date: 2009-05-12
Classification: G06Q

Abstract:
1. A method of creating and maintaining financial assets which accentuate different types of sub-loan level risk associated with a plurality of home mortgage loans and which are configured to operate as hedges against risks that oppose the different types of sub-loan level risk, comprising: acquiring a plurality of home mortgage loans from one or more lenders, the acquiring step being performed by a secondary mortgage market participant which provides funding for home mortgage loans, the home mortgage loan having a loan asset and a servicing asset, the loan asset comprising a right to receive loan payments from a borrower in connection with the loan, the loan payments comprising a principal payment portion and an interest payment portion, the servicing asset comprising a right to receive a servicing fee portion of the interest payment portion in exchange for performing servicing of the loan, wherein the servicing fee portion of each loan payment decreases as an unpaid principal balance of the loan decreases, each of the plurality of home mortgage loans being sensitive to the different types of sub-loan level risk, the loan asset and the servicing asset for each of the plurality of home mortgage loans in combination comprising a plurality of sub-loan level cash flows, wherein, for each of the plurality of home mortgage loans, individual sub-loan level cash flows exhibit heightened sensitivity to corresponding different types of sub-loan level risk relative to the sensitivity to the different types of sub-loan level risk exhibited by the respective home mortgage loan as a whole; decomposing each of the plurality of home mortgage loans into the plurality of sub-loan level cash flows, the decomposing step being performed by a computer-implemented cash flow decomposition/repackaging tool; repackaging the plurality of sub-loan level cash flows to form the financial assets, including selling the financial asset configured to produce the modified servicing fee to the servicer in connection with a transaction with the servicer, the transaction comprising one of (i) subcontracting responsibility for performing servicing of the loan to the servicer, wherein the servicer receives compensation for performing the servicing in accordance with the modified servicing fee, and (ii) reselling the servicing asset to the servicer, wherein the resold servicing asset comprises a right to receive the modified servicing fee in exchange for performing servicing of the loan; selling the remaining financial assets to different investors in the capital markets, thereby permitting the different investors to hedge against the risks that oppose the different types of sub-loan level risk; storing information concerning the modified servicing fee in a memory of a computer associated with the secondary mortgage market participant; and allocating payments for the servicer in accordance with the modified servicing fee, the payments being allocated by the computer associated with the secondary mortgage market participant.