Abstract:
The invention provides a method and system capable of automatic loan approval, in which lenders can both provide information to brokers regarding their loan policies, and in which brokers can obtain information regarding likely lender treatment of prospective borrowers. Thus, brokers search a database of possible loan programs made available by lenders, rather than lenders searching a database of possible loans made available by brokers.

Description:
BACKGROUND OF THE INVENTION 
   1. Field of the Invention 
   The invention relates to an automated loan approval system. 
   2. Related Art 
   In the mortgage loan industry, brokers obtain borrower information from prospective borrowers, coordinate with prospective lenders, and attempt to match borrowers with lenders in response to borrower information. It would be advantageous for brokers and lenders to be able to coordinate effectively, rapidly, and at minimal cost. 
   In one known method, a broker enters information on a loan request to be approved by one or more lenders, lenders review that loan request and indicate terms at which they would approve that loan request, and the broker selects one such bid to accept. This method achieves the general goal of presenting loan requests, and obtaining information regarding the lender view of those loan requests, substantially automatically and at reduced cost. 
   This known method has the feature that lenders might end up reviewing or approving substantially more loans than the number that are actually completed. For just one example, multiple lenders might conditionally approve a specific loan request, but only one of those lenders will actually complete the loan. 
   This known method also has the feature that brokers actually submit loan requests to find out whether that loan would be approved, by whom, and at what cost. For just one example, brokers might wish to advise prospective borrowers without the commitment or difficulty of making a complete loan application, such as to advise prospective borrowers of the likely available loan rates for borrowers in similar circumstances. 
   SUMMARY OF THE INVENTION 
   The invention provides a method and system capable of automatic loan approval, in which lenders can both provide information to brokers regarding their loan policies, and in which brokers can obtain information regarding likely lender treatment of prospective borrowers. Thus, brokers search a database of possible loan programs made available by lenders, rather than lenders searching a database of possible loans made available by brokers. 
   In an aspect of the invention, lenders might provide for selected loan requests to be automatically approved (herein sometimes called an “automatic lock”), subject to selected conditions, or might provide for selected loan requests to be approved by a loan officer, again subject to selected conditions. Lenders can control automatic approval of loan requests in response to a set of loan approval business rules, either associated with selected loan programs, or associated with selected lender business units. The loan approval business rules might themselves be responsive to information about the prospective borrower, the submitting broker, the channel of trade or manner in which the loan request is made, or other information. In one embodiment, lenders might provide for substantial post-lock modification of the loan request, either without substantial alteration to the loan, or with alteration to the loan responsive to those post-lock modifications. 
   For one example, not intended to limit the breadth of the invention in any way, a lender might provide for automatic loan approval for selected loan programs for those borrowers having a credit score above a selected threshold, while requiring loan officer approval for those same loan programs for borrowers having a lesser credit score. 
   In an aspect of the invention, lenders can provide for loan approvals to be automatically adjusted, subject to selected conditions. Lenders can control automatic adjustment of loan requests in response to a set of loan adjustment business rules, either associated with selected loan programs, or associated with selected lender business units. The loan adjustment business rules might themselves be responsive to information about the prospective borrower, the submitting broker, the channel of trade or manner in which the loan request is made, or other information. Loan adjustment business rules might be associated with selected explanations, including information for the broker or borrower regarding why the adjustment was made, or what alterations might be made to the loan to make further adjustments. 
   For a first example, not intended to limit the breadth of the invention in any way, a lender might provide for automatic loan adjustment for selected loan programs in response to a LTV (loan to value) fraction, so that for example a loan rate might be adjusted downward (that is, to a less expensive loan) if the borrower contributes additional capital toward purchase of the property, with the effect of lowering the LTV fraction. For a second such example, a lender might provide for automatic loan adjustment for selected brokers having a history of successful loan performance, such as a low default rate or a low fraction of loans ultimately disapproved for lack of borrower documentation. The automatic adjustment might relate to reduced document or fee requirements for the loan program itself. 
   In an aspect of the invention, lenders can provide for loan approvals to be controlled in response to an organizational structure of the lender. Some lending organizations distinguish among distinct business units, distinct loan offices within those business units, or distinct loan officers or (in possible embodiments, loan evaluation teams) within those loan offices. Lenders can control both automatic approval of loan requests and automatic adjustment of loan requests in response to association of the loan with one or more such distinct elements within the lending organization. 
   For a first example, not intended to limit the breadth of the invention in any way, a lender might provide for automatic loan adjustment for selected loan programs for a selected business unit, due to special efficiency or possible inefficiency of that selected business unit. For a second such example, a lender might provide for a limit (denominated either in number of dollars or, in a possible embodiment, another measure such as a number of loans) to the amount of automated loan approvals allowed per day for a selected individual loan officer, or a global limit to the amount of automated loan approvals allowed per day for any loan officer, or any loan office, or for the lender as a whole. 
   In an aspect of the invention, brokers have the capability of searching loan programs on behalf of a borrower, and for manipulating search results so as to find a “best” loan program. Brokers might determine a “best” loan program in response to a specific interest rate available to the borrower, a loan origination fee (measured in points) associated with the loan program, an estimate of closing costs or other fees associated with the loan program, an estimate of the fee available to the broker, and the like. Brokers might select a subset of those loan programs found by search (such as for example in response to a specific interest rate available to the borrower) and determine which ones of those loan programs are “best” in response to prospective alteration of the loan request. 
   For example, not intended to limit the breadth of the invention in any way, a broker might search a loan program database on behalf of a borrower, finding many loan programs for which the borrower qualifies. The broker might then organize those loan programs in response to factors favorable to the borrower, with the effect of presenting a relatively smaller number of loan programs for the borrower to consider and select among. 
   In an aspect of the invention, brokers have the capability of searching loan programs on behalf of a borrower, and for altering the search parameters in response to possible loan programs that do not fall strictly within the search, but for which the borrower might qualify under altered circumstances. A result of searching a loan program database presents both “hits” (loan programs fully within search parameters requested by the broker), and “near hits” (loan programs not within search parameters requested by the broker, but which would be within those search parameters if altered). In one embodiment, brokers can interact with a search engine for the loan program database, with the effect of altering search parameters until the broker is satisfied with the search results. 
   For example, not intended to limit the breadth of the invention in any way, a broker might search a loan program database on behalf of a borrower, finding many loan programs for which the borrower qualifies. The broker might then organize those loan programs in response to factors favorable to the borrower, with the effect of presenting a relatively smaller number of loan programs for the borrower to consider and select among. 
   For one example, not intended to limit the breadth of the invention in any way, a broker might search for loan programs available to a borrower with a selected loan amount, LTV fraction, borrower income, and non-discretionary borrower expenses. Search results might include a first set of loan programs for which the borrower is qualified, or a second set of loan programs for which the borrower is not qualified, but could become qualified with adjustment to one or more search parameters. In possible embodiments, search results may include both the first set and the second set at once, possibly with some indicator to differentiate search results in first set from search results in the second set. The broker might adjust such search parameters until a loan program is found that is both acceptable to the borrower and for which the borrower can meet the requirements. 
   In embodiments of the invention, there might be one or more brokers, and there might be one or more lenders. Thus, the ratio of brokers to lenders might be many-to-one, one-to-one, one-to-many, or many-to-many. 

   
     BRIEF DESCRIPTION OF THE DRAWINGS 
       FIG. 1  shows a block diagram of an automated loan approval system. 
       FIG. 2  shows a process flow diagram of a method of operating an automated loan approval system. 
   

   INCORPORATED DISCLOSURES 
   Inventions described herein can be used in conjunction with technology described in the following documents:
         U.S. Pat. No. 5,995,947, issued Nov. 30, 1999, in the name of Stephen FRASER, Sadashiv ADIGA, and Suresh PAYANKANNUR, titled “Interactive Mortgage and Loan Information and Real-Time Trading System”, and applications claiming priority therefrom.       

   These documents are hereby incorporated by reference as if fully set forth herein, and are sometimes referred to herein as the “incorporated disclosures”. 
   DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT 
   In the description herein, a preferred embodiment of the invention is described, including preferred process steps and data structures. Those skilled in the art would realize, after perusal of this application, that embodiments of the invention might be implemented using a variety of other techniques not specifically described, without undue experimentation or further invention, and that such other techniques would be within the scope and spirit of the invention. 
   System Elements 
     FIG. 1  shows a block diagram of an automated loan approval system. 
   A system  100  includes a communication network  110 , a set of broker stations  120 , a set of lender stations  130 , and a loan program server  140 . 
   The communication network  110  includes a set of communication links, with the effect that any broker station  120 , any lender station  130 , and the loan program server  140 , can intercommunicate. In one embodiment, the communication network  110  includes an Internet, or a subset of one. However, in alternative embodiments, the communication network  110  may include any system or technique by which intercommunication can take place, including an enterprise network, an extranet, a frame relay network, a LAN, an intranet, a private or public switched network, a virtual private network, and the like. In the context of the invention, there is no particular requirement that the communication network  110  is limited to any particular technique or technology. 
   Each broker station  120  includes a processor, program and data memory, an input device, and an output device, and is operated by a broker  121 . In one embodiment, each broker station  120  includes a PC or other workstation. However, in alternative embodiments, each broker station  120  may include any system or technique by which the broker  121  might present search requests and review and process results of those search requests, including a laptop or notebook computer, and the like. In the context of the invention, there is no particular requirement that the broker station  120  is limited to any particular technique or technology. 
   In possible embodiments, each broker station  120  may alternatively indude a handheld computer or PDA, or a cellular telephone or pager with computing features, or the like. As noted above, in the context of the invention, there is no particular requirement that the broker station  120  is limited to any particular technique or technology. 
   In the context of the invention, there is also no particular requirement that the broker stations  120  are identical or even substantially similar to each other. Each broker station  120  can operate independently and can be different, so long as each can carry out the functions described herein with regard to interaction with the broker  121  and with other components of the system  100 . 
   Similar to the broker stations  120 , each lender station  130  includes a processor, program and data memory, an input device, and an output device, and is operated by a loan officer  131 . In one embodiment, each lender station  130  includes a PC or other workstation. However, in alternative embodiments, each lender station  130  may include any system or technique by which the loan officer  131  might present search requests and review and process results of those search requests, including a laptop or notebook computer, and the like. In the context of the invention, there is no particular requirement that the lender station  130  is limited to any particular technique or technology. 
   Similar to the broker stations  120 , in possible embodiments, lender station  130  may include a handheld computer or PDA, or a cellular telephone or pager with computing features, or the like. As noted above, in the context of the invention, there is no particular requirement that the lender station  130  is limited to any particular technique or technology. 
   The loan program server  140  includes a loan program database  141 , a lender entry element  142 , and a search request element  143 . 
   The loan program server  140  also optionally includes an administrative workstation  144 , similar to the broker stations  120  and the lender stations  130 , with the capability of allowing an administrator  145  to make changes to operation of the loan program server  140 , possibly including making changes to the loan program database  141 . 
   The loan program database  141  includes a set of loan program entries  151 , each of which includes business rule information  152  pertinent to an associated loan program. In one embodiment, such information includes:
         A set of loan program qualifying rules, such as responsive to borrower credit score, borrower income, loan amount, location of the underlying property or other asset, LTV fraction, possible government subsidies or preferences associated with the loan program, and the like.   A set of automatic loan approval business rules, such as responsive to information about the prospective borrower (such as for example borrower credit score or borrower income), information about the submitting broker (such as history information for loans submitted by that broker), information about the channel of trade or manner in which the loan request is made (such as whether the loan was submitted using an EDI interchange technique, using an email request, using a fax, using a telephone request, or using a web link), and the like.   A set of automatic loan adjustment business rules, such as responsive to information similar to information for which automatic loan approval business rules are responsive. In one embodiment, loan adjustment business rules have associated therewith a set of explanatory information, such as a text message explaining to the broker or borrower, or both, one or more reasons for the adjustment, and what alterations might be made to the loan to make further adjustments.       

   In one embodiment, each loan program entry  151  includes scope information  153  pertinent to its scope within the lender organization, with the effect that the loan program entry  151  will have effect only so far as its scope information  153  matches elements of the organizational structure of the lender. Scope information  153  can distinguish among distinct business units, distinct loan offices within those business units, or distinct loan officers or (in possible embodiments, loan evaluation teams) within those loan offices. 
   In operation of the system  100 , the elements thereof have occasion to send and receive messages  160  of various types. As described herein, the lender stations  130  might send messages  160  directing the loan program server  140  to set up, change, or remove a loan program, possibly including creating a loan program entry  151 , altering a selected loan program entry  151 , or deleting a selected loan program entry  151 , and possibly including such operations with regard to business rule information  152  or scope information  153  for a selected loan program entry  151 . 
   Method of Operation 
     FIG. 2  shows a process flow diagram of a method of operating an automated loan approval system. 
   A method  200  is performed by the system  100 . Although the method  200  is described serially, the flow points and steps of the method  200  can be performed by separate elements in conjunction or in parallel, whether asynchronously or synchronously, in a pipelined manner, or otherwise. There is no particular requirement that the method  200  must be performed in the same order in which this description lists flow points or steps, except where explicitly so indicated. 
   Loan Program Setup 
   At a flow point  210 , a lender station  130  is ready to set up a loan program. 
   At a step  211 , the lender station  130  sends a message  160  to the loan program server  140 , requesting the latter to create a loan program entry  151 . The lender entry element  142  at the loan program server  140  receives the message  160 , performs the request, and responds to the lender station  130  with an acknowledgement. In the event of success, the acknowledgement so indicates. In the event of an error, the acknowledgement so indicates, and provides information regarding the nature of the error. 
   At a step  212 , the lender station  130  sends a message  160  to the loan program server  140 , requesting the latter to alter the loan program entry  151  to include selected information pertinent to the loan program, such as a set of business rule information  152  or scope information  153 . Similar to the step  211 , the lender entry element  142  at the loan program server  140  receives the message  160 , performs the request and responds to the lender station  130  with an acknowledgement. In the event of success, the acknowledgement so indicates. In the event of an error, the acknowledgement so indicates, and provides information regarding the nature of the error. 
   Loan Program Search 
   At a flow point  220 , a broker station  120  is ready to search for a loan program. 
   At a step  221 , the broker station  120  sends a message  160  to the loan program server  140 , requesting the latter to perform a search of the loan program database  141 . Similar to the step  211 , the search request element  143  at the loan program server  140  receives the message  160 , performs the request, and responds to the broker station  120  with an acknowledgement. In the event of success, the acknowledgement so indicates. In the event of an error, the acknowledgement so indicates, and provides information regarding the nature of the error. 
   At a step  222 , the search request element  143  at the loan program server  140  sends a message  160  including a set of search results to the broker station  120 . The search results include a set of loan program entries  151  (or indices thereof, or pointers thereto) responsive to the search request from the previous step. 
   In one embodiment, the search results include:
         A set of loan programs, each indicating a loan program for which the borrower qualifies. In one embodiment, each loan program includes associated information relating to conditions, such as loan programs that are conditional on proof of borrower income or appraisal of the underlying property.   A set of loan program adjustment values, each indicating an adjustment to the loan program, along with an associated reason for the adjustment. As a result of the loan program adjustment, an aspect of the loan program is altered. Aspects that might be altered include interest rate (either a fixed interest rate, or a base rate and a premium over an index rate for adjustable-rate loans), loan origination fees (sometimes referred to as “points”), and documentation and other fees. In one embodiment, the associated reason includes a text explanation of the alteration, such as for one possible example “POINTS WAIVED BECAUSE OF GOOD BORROWER CREDIT”.
 
Modifiable Parameters
       

   At a flow point  230 , a broker station  120  is ready to review the search results. 
   In one embodiment, the search results include either actual “hits,” that is, information from loan program entries  151  for which the borrower qualifies, or “near hits,” that is, information from loan program entries  151  for which the borrower does not qualify, but for which the borrower could qualify if at least one of the search parameters was altered. In this embodiment, search parameters are divided into those search parameters that are modifiable, that is, for which the borrower could reasonably be expected to alter the search parameter, and those search parameters that are not modifiable. An example of a search parameter that is modifiable is LTV, because the borrower could contribute more capital toward purchase of the property. An example of a search parameter that is not modifiable is location of the property, because the borrower cannot generally move the property. 
   In one possible embodiment, the search results might include both the actual hits and the near hits. In this possible embodiment, the search results might be color-coded, highlighted, or otherwise differentiated upon display, to indicate which search results are for the actual hits and which are for the near hits. 
   At a step  231 , the search request element  143  at the loan program server  140  sends a message  160  to the broker station  120 , with complete information for those search results that are actual hits. The broker at the broker station  120  can display any element of the complete information, including rates, points, and fees charged according to the loan program entry  151 . 
   At a step  232 , the search request element  143  at the loan program server  140  sends a message  160  to the broker station  120 , with only partial information for those search results that are near hits. The broker at the broker station  120  can display those elements for which the search parameters are modifiable. These search parameters are shown highlighted with the requirements for qualification only, so the broker at the broker station  120  can determine if the particular borrower is able to meet those requirements for qualification. 
   In one embodiment, modifiable parameters include: loan amount, LTV fraction, borrower income, and non-discretionary borrower expenses, and other parameters over which the borrower has a measure of control. Non-modifiable parameters include: borrower credit score, location of the property, and other parameters over which the borrower does not have a measure of control. 
   At a step  233 , the broker at the broker station  120  modifies at least one of those parameters shown as modifiable, and sends a message  160  to the search request element  143  at the loan program server  140  with the modified search results. 
   These steps can be repeated until the broker at the broker station  120  finds an acceptable loan program entry  151  for which the borrower can meet the qualifications, or until the broker at the broker station  120  decides that no such acceptable loan program entry  151  exists. 
   Best Loan Program 
   At a flow point  240 , a broker station  120  is ready to review those loan program entries  151  for which the borrower qualifies. 
   At a step  241 , the broker directs the broker station  120  to order the search results in response to one or more data fields found in the search results. In one embodiment, the broker station  120  is capable of ordering the search results in response to at least one of these data fields: a specific interest rate available to the borrower, a loan origination fee (measured in points) associated with the loan program, an estimate of closing costs or other fees associated with the loan program, (and in one possible embodiment) an estimate of the fee available to the broker, and the like. 
   For example, not intended to limit the breadth of the invention in any way, the broker might direct the broker station  120  to order the search results by the interest rate available to the borrower. In this example, the broker station  120  would calculate the actual interest rate for variable-rate loan programs (in response to current market data, available from the loan program server  140  or from another source), so that the interest rate would be immediately apparent without the broker having to perform that calculation. 
   For another example, again not intended to limit the breadth of the invention in any way, (in one possible embodiment) the broker might direct the broker station  120  to order the search results by a blended value, such as a weighted value using both the specific interest rate available to the borrower and the loan origination fee. While this blended value is not necessarily a direct economic measure of the loan program, it might reflect the preference the borrower would have for its associated loan program. 
   At a step  242 , the broker directs the broker station  120  to select a subset of those loan program entries  151 , in response to the search results and the ordering of those search results from the previous step. For one example, not limiting in any way, the broker at the broker station  120  might select only those loan program entries  151  having a specific interest rate available to the borrower. 
   At a step  243 , similar to the step  233 , the broker at the broker station  120  modifies at least one of those parameters shown as modifiable, and sends a message  160  to the search request element  143  at the loan program server  140  with the modified search results. 
   Similar to the steps following the flow point  230 , these steps can be repeated until the broker at the broker station  120  finds an acceptable loan program entry  151  for which the borrower can meet the qualifications, or until the broker at the broker station  120  decides that no such acceptable loan program entry  151  exists. 
   Lock Request 
   At a flow point  250 , a broker station  120  is ready to request a lock for one or more selected loan program entries. If the broker does not wish to request any locks, the steps following this flow point are not performed. 
   At a step  251 , the broker station  120  sends a message  160  requesting a lock (that is, a loan approval) for one or more selected loan program entries  151 . Similar to the step  211 , the loan program server  140  receives the message  160 , and responds to the lender station  130  with an acknowledgement. In the event of success, the acknowledgement so indicates. In the event of an error, the acknowledgement so indicates, and provides information regarding the nature of the error. 
   At a step  252 , the loan program server  140  attempts to perform an automatic lock (that is, an automatic loan approval) in response to the message  160  received in the previous step. The loan program server  140  reviews the business rule information  152  associated with the selected loan program entries  151  indicated in the message  160 , and applies the automatic loan approval business rules found therein. If the automatic loan approval business rules allow for an automatic lock, the loan program server  140  responds to the broker station  120  with a responsive message  160  so indicating. If the automatic loan approval business rules do not allow for an automatic lock, the loan program server  140  responds to the broker station  120  with a responsive message  160  so indicating. 
   At a step  253 , if the automatic lock was not allowed, the loan program server  140  sends a message  160  to a lender station  130  associated with the selected loan program entries  151 , or indicated in the associated business rule information  152 , or otherwise designated by the lender. In this step, the message  160  requests a manual lock (that is, review of the lock request by a loan officer at that lender station  130 , and approval of the lock by the loan officer at that lender station  130 ). This step might indude messages  160  between the selected lender station  130  and the broker station  120  requesting the lock, as part of a loan approval process performed by the lender and the broker. 
   At a step  254 , if the lock was approved (whether automatically or manually), the communication network  110  distributes information associated with the loan approval (whether conditional or not) to the broker station  120 , the lender station  130 , and the loan program server  140 , using messages  160 . The broker station  120 , the lender station  130 , and the loan program server  140  update their records regarding the specific loan, and possibly regarding the specific loan program entry  151 . 
   For one example, the loan program entry  151  might have associated business rule information  152  restricting a dollar amount of such loans that can be made (or in a possible embodiment, another measure such as an absolute number of such loans that can be made), or an amount of such loans that can be automatically locked, or an amount of such loans that can be automatically locked by a selected sub-unit of the lender. In such cases, the loan program server  140  updates the specific loan program entry  151  to indicate information regarding the specific loan that was made, such as its amount, the approving loan officer and sub-unit of the lender, and whether that specific loan was automatically locked or manually locked. 
   Loan Approval 
   At a flow point  260 , the specific loan has been approved, and system  100  is ready to process another loan. 
   In embodiments of the invention, there might be one or more brokers, and there might be one or more lenders. Thus, the ratio of brokers to lenders might be many-to-one, one-to-one, one-to-many, or many-to-many. 
   Alternative Embodiments 
   Although preferred embodiments are disclosed herein, many variations are possible which remain within the concept, scope, and spirit of the invention. These variations would become clear to those skilled in the art after perusal of this application.
         For just one example, not intended to limit the breadth of the invention in any way, the invention is applicable to all types of loans, including without limitation new home mortgages, home improvement loans, second mortgages, home equity lines of credit, construction loans, as well as to loans not related to real estate, such as new car loans, purchase money mortgages and related loans, business start up loans, business lines of credit, and the like. In the context of the invention, there is no particular requirement regarding the nature of the loan itself, or of the borrower, or of the lender.       

   Those skilled in the art will recognize, after perusal of this application, that these alternative embodiments are illustrative and in no way limiting.