Abstract:
A system, method and apparatus are disclosed for investment using a deed of trust or mortgage instrument. The method disclosed includes access by a certified financial professional to financial and other data on loans secured by a real estate instrument of title, evaluation of the investments, and populating the fixed income portion of a client portfolio with selected secured investments. The apparatus disclosed comprises a signal bearing medium, an electronic user interface, a financial license verification module configured to verify a government issued credential of a financial professional, a data collection module configured to access and store investment data, a secured real estate loan data base comprising listings of available interest bearing loans secured by a real estate instrument of title, and a data evaluation module configured to compare and evaluate investment possibilities.

Description:
CROSS REFERENCES TO RELATED APPLICATIONS 
   This application is a continuation-in-part of and claims priority to U.S. Provisional Patent Application No. 60/607,844 entitled “Investment Method Using Deed of Trust or Mortgage Instrument” and filed on Sep. 8, 2004 for Benson L. Schaub, which is incorporated herein by reference. 

   BACKGROUND OF THE INVENTION 
   Field of the Invention 
   The present state of art relates to the investment management of funds under contract that is customarily conducted by a registered investment advisor or a properly licensed money manager. The method of investment management currently in use typically divides a portfolio between fixed income and equities, with the fixed income investments being bonds, bond funds, utilities, CDs, Treasuries, and other traditional fixed income instruments. 
   The embodiment of the new invention replaces or supplements the traditional fixed income allocation of investments used by investment advisors and money managers with short-term (1 to 3 year), high-yield loans, secured by first (occasionally second) position mortgages on real estate. These mortgage loans are called “deed of trust” investments. Deed of trust or mortgage instrument investments have traditionally been made through a state licensed mortgage broker. The embodiment of the present invention, however, adds deeds of trust to the investments offered to clients of a federally registered investment advisor or money manager. 
   SUMMARY OF THE INVENTION 
   The new investment method of the embodiment of the present invention can allocate any percentage of the fixed income portion of the investment account or portfolio into these deed of trust investments. A further embodiment may include an equity allocation of any percentage of the investment account. The equity allocation can be managed in any of the current methods of selecting and managing equity investments. The apparatus is designed to electronically implement the investment method. 
   The equity allocation and fixed income allocation of a managed account or portfolio may vary according to the style of the investment advisor or money manager. There may also be other allocations other than equity or fixed income. The number or type of asset allocations does not affect the novelty of this new invention or investment method. Under the present invention, some percentage of allocation of fixed income investment will be comprised of short-term (1 to 3 year), high-yield loans, secured by first (occasionally second) position mortgages on real estate. 
   In a further embodiment, the deed of trust or mortgage instrument investments may be made through the involvement of a state licensed mortgage broker, as is required by law in some states. The investment method of the present invention may also be administered through the apparatus of the present invention, with another custom designed program, or with a modified form of an existing financial program such as Quicken, money, or Peach Tree. Furthermore, this new investment method may employ a software program that grades the quality of the loans used for fixed income investments. Additionally, the stocks or equity investments, or other asset allocation investments, to be purchased may be evaluated with the use of a computer program. 

   
     BRIEF DESCRIPTION OF THE DRAWINGS 
     In order that the advantages of the invention will be readily understood, a more particular description of the invention briefly described above will be rendered by reference to specific embodiments that are illustrated in the appended drawings. Understanding that these drawings depict only typical embodiments of the invention and are not therefore to be considered to be limiting of its scope, the invention will be described and explained with additional specificity and detail through the use of the accompanying drawings, in which: 
       FIG. 1  is a schematic block diagram depicting one embodiment of the proprietary Fixed Income Advantage method; 
       FIG. 2  is a schematic block diagram depicting one embodiment of a method for using a computer program to grade and evaluate stocks; 
       FIG. 3  is a schematic block diagram depicting one embodiment of a method for combination of the Fixed Income Advantage method with equity type investments; 
       FIG. 4  is a schematic block diagram depicting one embodiment of a method for using a computer program to evaluate and grade indexed stocks and managed funds for use in combination with the Fixed Income Advantage method; 
       FIG. 5  is a schematic block diagram depicting one embodiment of a method for the involvement of a mortgage broker in the Fixed Income Advantage Method; 
       FIG. 6  is a flow chart depicting one embodiment of the steps that a registered investment advisor or money manager would take in applying embodiments of the Fixed Income Advantage method of the present invention; 
       FIG. 7  is a flow chart depicting one embodiment of the steps that a registered investment advisor or money manager would take in applying embodiments of the Fixed Income Advantage method of the present invention in combination with equity type investment; 
       FIG. 8  is a schematic block diagram depicting one embodiment of an apparatus for investment using a deed of trust or mortgage instrument; 
       FIG. 9  is a schematic block diagram depicting one embodiment of a system for investment using a deed of trust or mortgage instrument; 
       FIG. 10  is a numerical illustration of one embodiment of an investment analysis system according to the present invention. 
   

   DETAILED DESCRIPTION OF THE INVENTION 
   Many of the functional units described in this specification have been labeled as modules, in order to more particularly emphasize their implementation independence. For example, a module may be implemented as a hardware circuit comprising custom VLSI circuits or gate arrays, off-the-shelf semiconductors such as logic chips, transistors, or other discrete components. A module may also be implemented in programmable hardware devices such as field programmable gate arrays, programmable array logic, programmable logic devices or the like. 
   Modules may also be implemented in software for execution by various types of processors. An identified module of executable code may, for instance, comprise one or more physical or logical blocks of computer instructions which may, for instance, be organized as an object, procedure, or function. Nevertheless, the executables of an identified module need not be physically located together, but may comprise disparate instructions stored in different locations which, when joined logically together, comprise the module and achieve the stated purpose for the module. 
   Indeed, a module of executable code may be a single instruction, or many instructions, and may even be distributed over several different code segments, among different programs, and across several memory devices. Similarly, operational data may be identified and illustrated herein within modules, and may be embodied in any suitable form and organized within any suitable type of data structure. The operational data may be collected as a single data set, or may be distributed over different locations including over different storage devices. 
   Reference throughout this specification to “one embodiment,” “an embodiment,” or similar language means that a particular feature, structure, or characteristic described in connection with the embodiment is included in at least one embodiment of the present invention. Thus, appearances of the phrases “in one embodiment,” “in an embodiment,” and similar language throughout this specification may, but do not necessarily, all refer to the same embodiment. 
   Furthermore, the described features, structures, or characteristics of the invention may be combined in any suitable manner in one or more embodiments. In the following description, specific details are provided. One skilled in the relevant art will recognize, however, that the invention can be practiced without one or more of the specific details, or with other methods, components, materials, and so forth. In other instances, well-known structures, materials, or operations are not shown or described in detail to avoid obscuring aspects of the invention. 
   The present invention may be embodied in other specific forms without departing from its spirit or essential characteristics. The described embodiments are to be considered in all respects only as illustrative and not restrictive. The scope of the invention is, therefore, indicated by the appended claims rather than by the foregoing description. All changes which come within the meaning and range of equivalency of the claims are to be embraced within their scope. 
   Deed of trust or mortgage instruments have traditionally been the purview of the state licensed mortgage broker, while the federally registered investment advisor or money manager relied on bonds, bond funds, utilities, CDs, and Treasuries as fixed-income investment vehicles. These investments, however, while secure, are typically relatively lower yield than equity type investments while being subject to a higher rate of taxation. This limitation has been a source of loss and frustration to individuals and organizations who either desire or are legally compelled to employ low-risk investment vehicles. 
   Deed of trust investments, however, particularly short-term loans secured by property, can be comparatively very secure and productive for fixed income type investments. Interest earned on a deed of trust can be expected to equal or surpass the average yield on even carefully selected equity investments. Furthermore, the value of deed of trust investments is secured by actual property at typically no more than a 70% loan to value ratio. Therefore, the rare default actually improves the position of the investor, who receives 100% of the value of the secured property, giving the investor a 30% increase over the value of the loan. All of these factors make the deed of trust and mortgage instrument investments of the present invention particularly appropriate as investment vehicles for client portfolio funds. The present invention makes these investment vehicles available to the clients of federally registered investment advisors and money managers. 
     FIG. 1  is a schematic block diagram depicting one embodiment of the proprietary Fixed Income Advantage method. A client  100  deposits portfolio funds  110  with a Registered money manager  120 . The money manager  120  invests a percentage of the client portfolio funds  130  in a selected deed of trust investment  140 , comprising a subject property  150  and a borrower  160 . The borrower  160  makes interest payments  170  to accrued interest  180  within the client portfolio funds  110 . A percentage of between zero and 100% of the accrued interest is paid out to the client  100  as interest payment  190 . 
     FIG. 2  is a schematic block diagram depicting one embodiment of a method for the use of a computer program in evaluating and grading mortgage instruments for use in the Fixed Income Advantage method. The client  100  deposits portfolio funds  110  with the Registered money manager  120 . The money manager  120  uses a computer program  200  in evaluating and grading potential deed of trust investments  210 . The money manager  120  then invests a percentage of the client portfolio funds  130  in a selected deed-of-trust investment  140 , comprising the subject property  150  and the borrower  160 . The borrower  160  makes interest payments  170  which accumulate at accrued interest  180  within the client portfolio funds  110 . The client  100  receives interest payments of from zero to 100% of the accrued interest  180 . 
     FIG. 3  is a schematic block diagram depicting one embodiment of a method for the combination of the Fixed Income Advantage method with equity type investments. The client  100  deposits portfolio funds  110  with the money manager  120 . The money manager  120  invests a percentage of the client portfolio funds  130  in selected deed of trust investments  140 , comprising the subject property  150  and the borrower  160 . The borrower  160  makes interest payments  170  to accrued interest  180  within the client portfolio funds  110 . The client  100  receives payments  190  from the accrued interest  180 . The money manager  120  also invests a percentage of client portfolio funds  300  in a selected equity type investment  310 . Earnings  320  are paid into accrued earnings  330 . The client receives payments  340  from the accrued earnings  330 . 
     FIG. 4  is a schematic block diagram depicting one embodiment of a method for employing computer programs to grade and evaluate mortgage instruments and indexed stocks and managed funds for use in combination. The client  100  deposits the client portfolio funds  110  with the money manager  120 . The money manager  120  employs computer program  200  to evaluate and grade potential deed of trust investments  210  and computer program  400  to evaluate and grade potential equity type investment stocks and managed funds  410 . The money manager  120  then invests a percentage of the client portfolio funds  130  in selected deed of trust investments  140 , comprising the subject property  150  and the borrower  160 . The borrower  160  makes interest payments  170  to accrued interest  180  within the client portfolio funds  110 . The client  100  receives payments  190  from the accrued interest  180 . The money manager  120  also invests a percentage of the client portfolio funds  300  in a selected equity type investment  310 . Earnings  320  are paid into accrued earnings  330 . The client receives payments  340  from the accrued earnings  330 . 
     FIG. 5  is a schematic block diagram depicting one embodiment of a method for the involvement of a mortgage broker in the Fixed Income Advantage Method. The client  100  deposits the client portfolio funds  110  with the money manager  120 . The money manager  120  uses a portion of the client portfolio the funds  130  to purchase a deed-of trust  140  through a mortgage broker  500 . The deed of trust investment comprises the subject property  150  and the borrower  160 . The borrower  160  makes interest payment  170  to accrued interest  180  within the client portfolio funds  110 . The client  100  receives payments  190 . 
     FIG. 6  is a flow chart diagram depicting one embodiment of the steps taken by a money manager or investment advisor in applying embodiments of the method of the present invention. The money manager  120  first receives  610  the client portfolio funds  110 . The money manager  120  then selects  620  an evaluation method for potential deed of trust investments  210 . In one embodiment the money manager uses non-computer means to evaluate and grade  630  potential deed of trust investments. In a further embodiment the money manager employs a computer program to evaluate and grade  635  the potential investments. The money manager then identifies  640  a qualified deed of trust  140 . 
   The money manager  120  next selects  650  the avenue of purchase for the deed of trust  140 . For example, some states require that mortgage instruments such as deeds of trusts that are provided by institutional or investment lenders to the general public be handled or placed by a mortgage broker,  500 . However, individual investors or their investment advisor can place loans directly to borrowers, as illustrated in some embodiments of present invention. In one embodiment the money manager purchases  660  the deed of trust  140  directly from the mortgagee or other vendor. In a further embodiment the money manager purchases  665  the deed of trust  140  through a state licensed mortgage broker  500 . The money manager receives  670  interest  170  on the deed of trust  130  into the accrued interest portion  180  of the client portfolio  110  and then pays out  680  interest payment  190  to the client  100 . 
     FIG. 7  is a flow chart diagram depicting further embodiments of applying the method of the present invention. The client  100  may desire to balance investments between fixed income and equity type investments. Consequently, in a further embodiment, the money manager  120  receives  610  client portfolio funds and then balances  710  the investment between deed of trust investments  140  and equity type investments  310 . For the deed of trust investment the money manager proceeds  720  according to  FIG. 6 . For the equity type investment the money manager selects  730  an evaluation method for equity type investments. In one embodiment the money manager evaluates and grades  740  potential equity type investments  410  using non-computer means. In a further embodiment, the money manager employs  745  a computer program  400  to evaluate, and grade the potential investments  410 . The money manager then identifies  750  the qualified equity type investment  310 . Next the money manager  120  purchases  760  the selected equity type investment  310  using a portion of the client funds  300 . 
   Following the purchase, the money manager receives  770  the earnings  320  from the equity type investment  310  into the accrued earnings portion  330  of the client portfolio  110  and pays out  780  earnings due  340  to the client  100 . 
     FIG. 8  is a schematic block diagram depicting one embodiment of an apparatus  800  for investment using a deed of trust or mortgage instrument. As depicted, the apparatus  800  comprises a user interface  802 , an identity verification module  804 , a data collection module  806 , a database search module  808 , a web crawler  810 , a data evaluation module  814 , a client requirement evaluation module  816 , a risk evaluation module  818 , an income projection module  820 , a portfolio recommendation module  822 , a decision interface  824 , a purchasing module  816 , an accounting module  828 , an interest collection module  830 , a default foreclosure module  832 , a portfolio tracking module  834 , and a tracking feedback module  836 . 
   In the depicted embodiment the user may be a licensed financial professional, such as a money manager or federally registered investment advisor. The user interface  802  interacts with the user to request and accept information. The identity verification module  804  queries the user for a license number, password, or other unique identifier proving the registered or licensed status of the user. In a further embodiment the identifier may include a digital certificate evidencing the professional status of the user. The identity verification module  804  then verifies the user&#39;s identity. The verification may include matching with a list of registration or license numbers, verification of a password, or verification of a digital certificate. Upon successful verification the identity verification module  804  authorizes user access to the apparatus  800 . 
   The data collection module  806  may collect client data supplied by the user, may search a database of loans secured by a real estate instrument of title, and may search the internet for other qualifying loans. The data collection module  806  may include a database search engine  810  and a web crawler  812 . The data collection module  806  passes relevant data to the data evaluation module  814 . 
   The data evaluation module  814  may include a client requirement evaluation module  816 , a risk evaluation module  818 , and an income projection module  820 . In the depicted embodiment the modules comprise either standard or custom designed computer hardware and software. The data evaluation module  814  may incorporate prioritized gate arrays that order the sequence and weight of analysis. For example, if the client requirement evaluation module  816  indicates the client to be risk averse then the risk evaluation module  818  would pre-sort, rank, and even eliminate potential investments according to risk before passing the acceptable investments to the income potential module  820 . If the client requirement evaluation module  818  indicates the client to be risk tolerant then the income potential module  820  would identify and rank the available investments according to income potential and pass the highest income investments to the risk evaluation module  818 . In a further embodiment a user may pre-specify minimum acceptable income and maximum acceptable risk level. 
   The portfolio recommendation module  822  may receive evaluation information from the data evaluation module  814 , formulate customized investment recommendations, and pass these to the decision interface module  824 . The decision interface module  824  may interactively present the recommendations to the user and receive user input relative to the recommendations. The decision interface module  824  may further pass the approved purchase information to the purchase module  826 . The purchase module  826  may be configured to issue a purchase order or other instrument to trigger the purchase of the approved investments. Upon completion of the purchase the purchase module  826  may pass the investment information to the accounting module  828 . 
   The accounting module  828  may include an interest collection module  830  and a default foreclosure module  832 . The interest collection module  830  is configured to manage interest payments from the portfolio investments. Such management may include electronic collection and banking of interest payments. The default foreclose module  832  would come into play only in the instance of a default on a portfolio loan. In such an event the foreclosure module  832  may trigger foreclosure on the real property securing the relevant loan. 
   The portfolio tracking module  834  is configured to monitor the performance of the portfolio investments. This may be done on a strictly objective basis or, in a further embodiment, in light of the client requirements. The portfolio tracking module  834  may pass information to the tracking feedback module  836 , which may pass the information directly to the user through the user interface  802  or other avenue. In a further embodiment the tracking feedback module  836  may pass feedback information to the portfolio recommendation module  822 . Basked on the tracking feedback the portfolio recommendation module  822  may generate new or revised recommendations. 
     FIG. 9  is a schematic block diagram depicting one embodiment of a system  900  for investment using a deed of trust or mortgage instrument. As depicted, the system  900  comprises a federally registered investment advisor, state licensed money manager or similar financial professional  120 , a user computer  902 , an apparatus  800  as elucidated in  FIG. 8 , a secured loan database  904 , an internet  906 , a loan purchase point  908 , and a licensed mortgage broker  910 . The financial professional  120  accesses the apparatus  800  through the user computer  902 . The apparatus  800  accesses the secured loan database  904  and may also access the internet  906 . Based on the available data the apparatus  800  formulates portfolio recommendations and presents these to the financial professional  120 . The financial professional  120  returns investment decisions to the apparatus  800  through the user computer  902 . Upon receiving the investment decisions the apparatus  800  triggers the appropriate loan purchase at the loan purchase point  908 . Alternatively, as required in some states, the purchase may be made through a state licensed mortgage broker  510 . 
     FIG. 10  is a numerical illustration of one embodiment of an investment analysis system  1000  according to the present invention. As depicted, the analysis system  1000  includes a client questionnaire  10 A, a trust deed allocation estimate (“TD”)  10 B, an equity allocation estimate (“EQ”)  10 C, and combined expectations values  10 D. 
   In the depicted embodiment the certified financial professional interacts with the client to fill out the client questionnaire  10 A, and enters the information into an electronic analysis protocol such as system  900  or apparatus  800 . Analysis of the client&#39;s answers to the questions generates an allocation score  1010 . An allocation table  1020  ties consecutive ranges of scores to percentage allocation of investment between fixed income and equity investments. The investment analysis system  1000  generates an individualized recommended allocation  1030 . 
   The TD  10 B illustrates electronically projected future values of the trust deed investment. The EQ  10 C illustrates electronically projected future values of equity investment. The combined expectations values  10 D illustrated electronically projected future values of the individualized allocation recommended for the client. The combined expectation values also projects income comparisons between the recommended allocation according to the Investment Advantage system and other standard investment vehicles such as Dow Jones and S&amp;P 500.