Abstract:
A method of originating a loan. In one embodiment, the method includes establishing a legally binding agreement between a real estate agent and a mortgage company. The agreement has a set of terms which include establishing the real estate agent as an independent contractor; obligating the real estate agent to communicate with an agent of the mortgage company; obligating the real estate agent to disclose the relationship with the mortgage company to a prospective buyer; and establishing a compensation of the real estate agent by the mortgage company. The real estate agent must also disclose the relationship between the real estate agent and the mortgage company to a prospective buyer.

Description:
CROSS REFERENCE TO RELATED APPLICATIONS  
       [0001]     This application claims priority to U.S. Provisional Application No. 60/640,683, filed Dec. 31, 2004, Attorney Docket No. 065581-9002-00, the entire contents of which are incorporated herein by reference. 
     
    
     BACKGROUND  
       [0002]     Embodiments of the invention relate to a method and a system for originating loans.  
         [0003]     The process of applying for, obtaining, and paying back a mortgage loan is one known to millions of adults. While computerization and the Internet have changed the process in certain ways, many of the basic aspects have remained unchanged since individuals first started borrowing money to purchase homes and other real estate.  
         [0004]     Part of a typical process may involve a potential buyer working with a real estate agent to find a property that meets the buyer&#39;s requirements. After finding the property, the buyer then applies for a loan from a bank or other mortgage lender. The lender assesses the buyer to ensure that he or she meets certain criteria. If so, the bank approves the loan. Once the loan is approved, the purchase may ensue. The appropriate funds are provided to the seller, and the buyer takes possession of the real estate. Typically, the real estate agent has relatively little involvement in helping the buyer secure a loan, other than perhaps suggesting to the buyer that certain lenders may be interested in lending the buyer funds.  
       SUMMARY  
       [0005]     Embodiments of the invention provide methods and systems whereby real estate agents may have a more active role in assisting buyers in obtaining appropriate financing. The following summary sets forth certain embodiments of such methods and systems. However, it does not set forth all such embodiments and should in no way be construed as limiting of any particular embodiment.  
         [0006]     One embodiment includes a method of originating a loan. The method may include, among other things, establishing a legally binding agreement between a real estate agent and a mortgage company to establish the real estate agent as an eternal loan originator, wherein the agreement has a set of terms. The set of terms can include establishing the external loan originator as an independent contractor; obligating the external loan originator to communicate with an agent of the mortgage company; obligating the external loan originator to disclose the relationship with the mortgage company to a prospective buyer; and establishing a compensation of the external loan originator by the mortgage company. The method of originating the loan also includes obtaining, if required by law for the external loan originator, a Federal or State loan originator license. After the license has been obtained the external loan originator contacts a prospective buyer. The external loan originator discloses the relationship with the mortgage company to the prospective buyer prior to completing a pre-approval application. The pre-approval application includes information sufficient to generate an initial assessment of the prospective buyer&#39;s credit worthiness, but which excludes specific loan terms. The external loan originator is compensated upon consummation of the loan pursuant to the terms of the agreement.  
         [0007]     In another embodiment a method of originating a loan includes establishing a legally binding agreement with an external licensed loan originator. The agreement has a set of terms that include establishing the external loan originator as an independent contractor; obligating the external loan originator to disclose the agreement to a prospective buyer; and establishing a compensation of the external loan originator. The method of originating the loan can also include receiving a pre-approval application from the external loan originator. The pre-approval application includes information sufficient to generate an initial assessment of the prospective buyer&#39;s credit worthiness, but which excludes specific loan terms. Additionally, compensation is dispersed upon consummation of the loan pursuant to the terms of the agreement.  
         [0008]     In yet another embodiment a method of originating a loan includes becoming a licensed external loan originator with a bank. An agreement is also established with the bank, and the agreement has a set of terms. The set of terms can include becoming an independent contractor with respect to the bank; communicating with an agent of the mortgage company; and establishing a compensation amount by the mortgage company. Additionally, the method of originating the loan includes obtaining, if required by law, a Federal or State loan originator license; disclosing a relationship with the bank with a prospective buyer; and completing a pre-approval application. The pre-approval application can include information sufficient to generate an initial assessment of the prospective buyer&#39;s credit worthiness, but which excludes specific loan terms. Upon consummation of the loan pursuant to the terms of the agreement, compensation is received.  
         [0009]     Other embodiments will become apparent to those skilled in the art upon review of the following detailed description and drawings. 
     
    
     BRIEF DESCRIPTION OF THE DRAWINGS  
       [0010]      FIG. 1  is a schematic diagram of a system according to one embodiment of the invention.  
         [0011]      FIG. 2A  illustrates a first portion of a flow chart of processes carried out in certain embodiments of the invention.  
         [0012]      FIG. 2B  illustrates a second portion of a flow chart of processes carried out in certain embodiments of the invention.  
         [0013]      FIG. 3A  illustrates a first portion of an exemplary agreement between a lender and a real estate agent.  
         [0014]      FIG. 3B  illustrates a second portion of the exemplary agreement of  FIG. 3A .  
         [0015]      FIG. 3C  illustrates a third portion of the exemplary agreement of  FIG. 3A .  
         [0016]      FIG. 3D  illustrates a fourth portion of the exemplary agreement of  FIG. 3A .  
         [0017]      FIG. 3E  illustrates a fifth portion of the exemplary agreement of  FIG. 3A .  
         [0018]      FIG. 4  illustrates an exemplary relationship disclosure form.  
         [0019]      FIG. 5  illustrates an exemplary pre-approval loan form. 
     
    
     DETAILED DESCRIPTION  
       [0020]     Before any embodiments of the invention are explained in detail, it is to be understood that the invention is not limited in its application to the details of construction and the arrangement of components set forth in the following description or illustrated in the following drawings. The invention is capable of other embodiments and of being practiced or of being carried out in various ways.  
         [0021]      FIG. 1  illustrates an exemplary system  10  that includes a realtor&#39;s office  12  that may include therein one or more communication devices (not shown), such as a cellular phone, telephone, facsimile machine, personal digital assistant, one or more computers with a network connection, and the like. Each of the communication devices may be capable of being associated with a realtor or real estate agent  14  (such as by a telephone number, universal resource locator, email address, and the like). As a result, persons external to the realtors office  12  may communicate with the realtor  14  via the communication device or devices at the realtor&#39;s office  12 , or otherwise associated with the realtor  14 .  
         [0022]     The system  10  also includes a lender&#39;s office or facility  16 . In the embodiment shown, the facility  16  houses a bank or mortgage company, and agent(s) thereof. As with the realtor&#39;s office  12 , the facility  16  may include one or more communication devices (not shown), such as a cellular phone, telephone, facsimile machine, computer with a network connection, personal digital assistant, and the like, that is capable of being associated with a mortgage company conducting business at the facility  16  or with a banker  18  (such as by a telephone number, universal resource locator, email address, and the like). As a result, persons external to the bank or mortgage company may communicate with the lender or banker  18  via the communication device or devices at the facility  16 , or otherwise associated with the banker  18 .  
         [0023]     The system  10  also includes a buyer  22 . The buyer  22  may be interested in purchasing a home or other real estate  24  from a seller  25 . A government agency  30  may also participate in the system  10 . The government agency  30  may be an agency that regulates banking or real estate in a particular jurisdiction, such as a state in the United States of America. As with the realtor  14  and banker  18 , the buyer  22  and government agency  30  may be associated with one or more communication devices (not shown). Thus, as should be apparent from  FIG. 1 , the buyer  22 , realtor  14 , banker  18 , and government agency  30  may communicate with each other in a variety of ways and through a variety of mechanisms. Generically, a network  35  is shown as providing a communication mechanism or link between the parties. The network  35  may include or encompass a variety of wired and wireless networks using protocols and equipment sufficient to support, among other things, communications using the telephone, facsimile, e-mail, and Internet communications referenced above. The network  35  may also include non-electronic forms of communication, such as traditional mail.  
         [0024]      FIGS. 2A and 2B  illustrate an exemplary process  95 , in which various transactions may be carried out among parties such as those depicted in  FIG. 1 . Some and possibly all of the process  95  included in  FIGS. 2A and 2B  may be automated and implemented in software, hardware, and/or firmware. Alternatively or additionally, the process  95  can be carried out using traditional, non-electronic methods.  
         [0025]     The process  95  begins at step  100 , where the realtor  14  and banker  18  agree to a contractual relationship or agreement whereby the realtor  14  becomes an external loan originator (“ELO”) for the mortgage company. As with any contract, the agreement between the realtor  14  and mortgage company sets forth certain rights and obligations of the parties, for example, as described with respect to  FIGS. 3A-3E  below. Once a contractual relationship is established, a determination is made as to whether the realtor, now an ELO  14 , must obtain any permissions or licenses from any governing agencies, such as the agency  30  (step  104 ). This determination may be made by the ELO  14 , the banker  18 , the two acting in cooperation with one another, or another appropriate entity. If approval is required, the ELO  14  applies for approval as a loan originator (step  108 ).  
         [0026]     Once approval is obtained, the ELO  14  performs certain actions with the buyer  22  (step  112 ). In the example illustrated, the ELO  14 , if required by law or regulation, discloses to the buyer  22  the ELO&#39;s relationship as an ELO of the bank or mortgage company. This disclosure informs the buyer  22  that the ELO  14  has a financial interest (e.g., in the form of an origination fee received from the banker  18 ) in having the buyer  22  obtain his or her loan from the mortgage company. In some embodiments, the relationship disclosure includes the buyer  22  signing a disclosure form (an example of which is shown in  FIG. 4 ). In addition to disclosing the relationship with the mortgage company, the ELO  14  also obtains permission from the buyer  22  to have his or her financial records (such as a credit history) reviewed as part of the process of determining whether to issue a loan to the buyer  22 . This permission may also take the form of a written permission form signed by the buyer  22 . If permission is granted by the buyer  22 , the ELO  14  queries the buyer  22  to obtain information sufficient for the banker  18  to determine whether the buyer  22  may be approved for a loan (e.g., information to make a preliminary determination of credit worthiness). The results of the queries can be recorded, for example, on a buyer information form (an example of which is shown in  FIG. 5 ) that the ELO  14  then submits to the banker  18 .  
         [0027]     After the ELO  14  discloses the relationship with the mortgage company, obtains approval from the buyer  22  to examine the buyer&#39;s financial records, and obtains the information needed to complete the buyer information form (step  112  of  FIG. 2A ), the ELO  14  transmits (such as by facsimile, e-mail, EDI, etc.) the information to the banker  18  (step  116 ). When the banker  18  receives the information from the ELO  14 , the banker  18  performs an analysis to determine whether a loan to the buyer  22  should be issued or approved (step  120 ). A variety of analyses may be performed on information provided by the ELO  14 . Such analyses can include those currently used by financial institutions or future developed analyses. If the banker  18  determines that the buyer  22  does not meet the bank or mortgage company&#39;s criteria for obtaining a loan, the mortgage company informs the buyer (and possibly the ELO  14 ) of its decision and the process terminates (step  122 ). If, however, the buyer  22  is approved for a loan, the banker  18  processes and closes the loan, for example, using well-known techniques and procedures or future developed techniques and procedures (step  124 ). Appropriate funds are then routed to the seller  25 . In one embodiment, upon completion of the real estate transaction or, possibly in anticipation of its successful completion, the ELO  14  invoices the bank or mortgage company for an origination fee (step  130  of  FIG. 2B ). Upon receiving the invoice, the bank or mortgage company pays the ELO  14  the fee set forth in the agreement initially negotiated between the ELO  14  and the banker  18  (step  134 ). In another embodiment, some other mutually agreed-to condition can be used to disperse funds to the ELO  14  for services rendered. For example, the mortgage company, upon closure of the loan, can automatically distribute funds to the ELO  14  without having to be invoiced.  
         [0028]      FIGS. 3A-3E  illustrate an exemplary Agreement (shown generally at  300 ) that can be used in step  100  of the process  95  ( FIG. 2A ). It should be appreciated that, in other embodiments, an agreement between the ELO  14  and the mortgage company (or banker  18 ) may include more or fewer provisions than those set forth in the exemplary Agreement  300 . In one embodiment, the Agreement  300  requires that the ELO  14  perform certain acts and services for the mortgage company (or banker  18 ) in exchange for certain remuneration (for example, a percentage of a loan amount lent to the buyer) from the mortgage company. For example, as provided in articles  2  and  7  of the Agreement  300 , the ELO  14  is established as a non-exclusive, independent contractor of the mortgage company. Additionally, as provided in article  4  of the Agreement  300 , the ELO  14  is required to consult with a representative or employee (e.g., the banker  18 ) of the mortgage company in the performance of services. For example, the ELO  14  may have to consult with the banker  18  prior to, during, and/or after the services of process step  112  are performed. The Agreement  300  also establishes a compensation amount of the ELO  14  for services rendered, for example, as provided in article  6 . In another article of the Agreement (article  8 ), confidentiality and conflict terms are disclosed. In the interest of brevity, the remaining Articles of the agreement  300  are not specifically described herein. However, the remaining Articles should be readily understood by reading and examining the figures.  
         [0029]      FIG. 4 . illustrates an exemplary relationship disclosure form  400  that, in one embodiment, can be used in step  112  of the process  95  ( FIG. 2A ). The form  400  generally includes identity information  405  of the ELO  14  and the mortgage company. The form  400  also includes an explicit statement  410 , which states that the buyer  22  is not required to use the ELO  14  or the mortgage company to obtain financing. The relationship disclosure form  400  is perfected by the buyer signing the form  400  in a signature area  415 . In other embodiments, the relationship disclosure form  400  may be arranged differently or include additional information.  
         [0030]      FIG. 5  illustrates an exemplary buyer information form  500  (which may be a hard-copy or an electronic form) that can also be used during step  112  of the process  95  ( FIG. 2A ). The buyer information form  500  generally includes a field for the borrower&#39;s name, date of birth, Social Security number, and gross monthly income; a co-borrower&#39;s name, date of birth, Social Security number, and gross monthly income; the address or addresses of the borrower and co-borrower, the desired price range of the real estate the buyer is interested in, a home telephone number, and a day-time telephone number. Of course, alternative or substitute fields may be used depending upon the information that is desired by the banker  18 , such as an email address of the borrower. Preferably, the form  500  does not include information regarding interest rates of a perspective loan, specific re-payment schedules of a perspective loan, and the like. These are terms that go beyond a typical pre-approval process and, therefore, should be handled directly by the banker  18  rather than the ELO  14 .  
         [0031]     Various embodiments are set forth in the following claims.