U.S. patent application number 11/352252 was filed with the patent office on 2006-06-15 for system and method for trading and originating financial products using a computer network.
Invention is credited to Thomas R. Goodwin, Kingsley J. II Greenland, Bruce K. Hounsell, William J. Jakubowski.
Application Number | 20060129477 11/352252 |
Document ID | / |
Family ID | 22839829 |
Filed Date | 2006-06-15 |
United States Patent
Application |
20060129477 |
Kind Code |
A1 |
Goodwin; Thomas R. ; et
al. |
June 15, 2006 |
System and method for trading and originating financial products
using a computer network
Abstract
The invention relates to systems and methods for trading
financial products over a computer network, such as the Internet.
In one embodiment, the invention provides a method for trading
financial products over a computer network. Seller information is
received from a first client, the seller information relating to a
financial product offered for sale on behalf of a seller, at least
some of the seller information comprising due diligence
information, the due diligence information capable of fulfilling at
least a portion of a request for due diligence on the financial
product. The seller information about the financial product is
stored in a database. A second client is provided with an
opportunity to obtain the due diligence information on behalf of a
potential buyer of the financial product. A bid is stored for the
financial product from the second client in the database, if it can
be shown that second client has obtained the due diligence
information.
Inventors: |
Goodwin; Thomas R.;
(Hamilton, MA) ; Greenland; Kingsley J. II;
(Norfolk, MA) ; Hounsell; Bruce K.; (Boston,
MA) ; Jakubowski; William J.; (Boston, MA) |
Correspondence
Address: |
MCKENNA LONG & ALDRIDGE LLP;Song K. Jung
1900 K Street, N.W.
Washington
DC
20006
US
|
Family ID: |
22839829 |
Appl. No.: |
11/352252 |
Filed: |
February 13, 2006 |
Related U.S. Patent Documents
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Application
Number |
Filing Date |
Patent Number |
|
|
09928109 |
Aug 10, 2001 |
7035820 |
|
|
11352252 |
Feb 13, 2006 |
|
|
|
60224240 |
Aug 10, 2000 |
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Current U.S.
Class: |
705/37 |
Current CPC
Class: |
G06Q 30/08 20130101;
G06Q 40/04 20130101; G06Q 40/00 20130101; G06Q 40/02 20130101 |
Class at
Publication: |
705/037 |
International
Class: |
G06Q 40/00 20060101
G06Q040/00 |
Claims
1. A method for trading financial products over a computer network,
comprising: receiving seller information from a first client, the
seller information relating to a financial product offered for sale
on behalf of a seller, at least some of the seller information
comprising due diligence information, the due diligence information
capable of fulfilling at least a portion of a request for due
diligence on the financial product; storing the seller information
about the financial product in a database; providing a second
client with an opportunity to obtain the due diligence information
on behalf of a potential buyer of the financial product; and
storing a bid for the financial product from the second client in
the database, if it can be shown that second client has obtained
the due diligence information.
2. The method of claim 1 wherein the step of receiving seller
information further comprises receiving diligence information that
comprises an electronic representation of a physical due diligence
document.
3. The method of claim 2 wherein the step of receiving seller
information further comprises receiving diligence information that
comprises an electronic image substantially replicating the
physical due diligence document.
4. The method of claim 2 further comprising the step of receiving a
request from a second client for at least some information relating
to the financial product.
5. The method of claim 1 further comprising the step of providing a
second client with a list comprising at least one financial product
offered for sale.
6. The method of claim 1 further comprising the step of searching
the database for at least one financial product meeting a condition
provided by a second client.
7. The method of claim 1 further comprising the step of providing
at least one stored bid to the first client.
8. The method of claim 1 further comprising the step of accepting a
stored bid on behalf of the first client if the stored bid
satisfies the seller.
9. The method of claim 8, wherein the step of accepting a stored
bid on behalf of the first client if the bid satisfies the seller
further comprises receiving a notification that the seller has
accepted the stored bid.
10. The method of claim 8, wherein the step of accepting a bid on
behalf of the first client if the bid satisfies the seller further
comprises determining that the stored bid meets a predetermined
condition set by the seller.
11. The method of claim 8 further comprising the step of storing
trade history information in the database, the trade history
information relating to at least one bid for a financial product
that was accepted.
12. The method of claim 11, wherein the step of storing information
in the database relating to at least one accepted bid further
comprises storing information about at least one of the following:
terms of the bid, terms of the financial product, time periods,
conditions, locations, appraisals, discounts, liens, status,
sponsors, servicing type, status, maturity, principal balance,
financial product type, origination date, monthly payment, maturity
date, interest rate, interest accrual method, and performance
level.
13. The method of claim 1 further comprising the step of computing
a price for the financial product.
14. The method of claim 11 further comprising the step of computing
a price for the financial product, wherein the step of computing
the price for the financial product is based at least in part on at
least one of the following: market information, seller information,
due diligence information, and trade history information.
15. The method of claim 14, wherein the market information includes
at least one indicator selected from the group consisting of U.S.
Federal Funds rate, U.S. prime rate, bond rate, U.S. Treasury bill
rate, U.S. Treasury bond rate, U.S. Treasury note rate, S&P 500
index, Dow Jones Industrial Average, and NASDAQ Combined Composite
Index.
16. A computerized exchange for trading financial products, wherein
the exchange is accessible using a computer network, comprising: a
server in operable communication with a client, the server
programmed for receiving requests from a client to price a
financial product offered for sale; a pricing engine in
communication with the server, the pricing engine computing a price
for the financial product offered for sale, the price based at
least in part on at least one of the following: market information,
information that the seller has provided about the financial
product information that the client provides about the financial
product, due diligence information, and trade history information;
and a database storing information relating to the least one
financial product offered for sale and the computed price for that
financial product.
17. The computerized exchange of claim 16, wherein the information
relating to the at least one financial product for sale further
comprises due diligence information, the due diligence information
capable of fulfilling at least a portion of a request for due
diligence on the financial product.
18. The computerized exchange of claim 17 wherein the server is
further programmed to provide information about the financial
product to a client in response to a request for information from
the client.
19. The computerized exchange of claim 18 wherein the server is
further programmed to provide the seller of the financial product
with a bid on a financial product that was received from a bidder
if the bidder has received the due diligence information.
20. A computerized system for trading financial products,
comprising: means for receiving information about at least one
financial product for sale, the information including due diligence
information capable of fulfilling at least a portion of a request
for due diligence on the financial product; means for computing a
price on the financial product, the price based at least in part on
at least one of the following: market information, information
received about the financial product, due diligence information,
and trade history information; means for providing a potential
bidder on the financial product with the due diligence information
and a price for the financial product; and means for storing a bid
on the financial product if the bidder has received the due
diligence information on the financial product.
Description
CROSS REFERENCE TO RELATED APPLICATION
[0001] This application claims the priority of U.S. Provisional
Application Ser. No. 60/224,240 entitled "System and Method for
Trading and Originating Commercial Loans Using a Computer Network"
filed Aug. 10, 2000, the contents of which are incorporated herein
by reference in their entirety.
FIELD OF THE INVENTION
[0002] Embodiments of the present invention generally relate to
systems and methods for providing information relating to financial
products such as commercial loans. More specifically, embodiments
of the present invention are directed to a data processing system
for buying, selling, trading, originating, and providing
information on financial products over a computer network, such as
the Internet.
BACKGROUND OF THE INVENTION
[0003] During the past decade, institutions having loans on their
balance sheets have moved from a "hold to maturity" philosophy to a
proactive portfolio management model. The larger, more
sophisticated institutions first adopted the proactive portfolio
management model, and this popularity of this model has migrated
down to smaller institutions. Managers of such proactive
portfolios, such as executives, often are concerned with four
issues: liquidity, capacity, exposure, and credit risk. Such
executives are increasingly recognizing the emerging secondary
whole loan market as the appropriate mechanism for managing these
concerns.
[0004] The secondary whole loan market is in its infancy, however
and still lacks necessary efficiencies and liquidity. Trading and
originating commercial loans currently is handled in a costly,
labor-intensive, and time-consuming manner. The lack of a
centralized clearing mechanism for commercial loans hampers both
sellers and buyers of commercial loans.
[0005] Executives and other sellers of commercial loans face a
number of obstacles. For example, the commercial loan market is
fragmented and has no central clearing mechanism, making it
difficult to locate the best buyer for a given loan. Frequently,
executives are unable to inform more than a few buyers about a
commercial loan opportunity. Such limited distribution of
opportunities limit the efficiency with which a transaction can
occur and can result in a seller not achieving the best price or
terms for the sale. In addition, lack of historical transaction
data impedes the ability of parties to a transaction to price
assets quickly and accurately. This makes the analysis of a sell
decision inefficient and time-consuming.
[0006] Even if executives overcome these obstacles, usually there
is a long delay between the decision to sell and the actual
execution of the sale, further complicating the process and
increasing the risk of not achieving the required sale price. The
inefficiencies and lack of internal resources often force
executives to make less desirable decisions. For example many
parties allocate internal resources to make the necessary
divestitures to maintain liquidity or asset/liability maturity
requirements. The parties often turn away potentially profitable
new loans because of geographic, product, or borrower
diversification purposes. In the case of sub or non-performing
assets, the remaining choices are to employ expensive and
time-consuming workout strategies or do nothing.
[0007] Investors trying to acquire loans run into many of the same
problems described above. Investors also incur significant time and
dollar expenses performing acquisition due diligence, and run into
supply limitations due to the unpredictable nature of deal
flow.
SUMMARY OF THE INVENTION
[0008] There are at least three significant obstacles to efficient
secondary market trading and participation: the inability to
readily price assets in relation to existing market conditions, the
inability of sellers to quickly and effectively reach a broad and
qualified investor audience, and the significant time and cost
associated with conducting traditional due diligence.
[0009] In at least one embodiment, the invention provides publicly
available mark-to-market tools that enable users to price their
assets at any time. In at least one embodiment, the invention
provides a pricing model that gives sellers an indication of an
asset's market value given its individual characteristics and
prevailing market conditions.
[0010] In at least one embodiment, the invention provides an
efficient marketplace for trading commercial debt, including an
open, market-driven exchange that reduces transaction costs,
compresses transaction cycles, and enables extended buyer and
seller participation in the secondary commercial debt market.
[0011] In at least one embodiment, the invention solves and
addresses portfolio managers' concerns by providing a vertical
Internet portal for the auction of commercial loans. This solution
provides liquidity and efficiency in the secondary commercial loan
market and enables executives to appropriately address their
portfolio management needs. In another aspect, the present
invention provides an Internet location that can serve as a central
clearing mechanism for listing and auctioning financial products
such as commercial loans. This Internet location provides benefits.
First, it provides a consolidated site for sellers, buyers, agents,
borrowers, and service providers to list, evaluate, solicit, and
bid on loans. In addition, it is automated to compress the auction
cycle and reduce overall transaction costs, which helps connect and
expand the universe of buyers and sellers.
[0012] In another embodiment, the invention includes systems and
methods providing quick, accurate, and free pricing information
that can dramatically increase loan sale transaction volume. In
still another embodiment of the invention, the portal includes
proprietary pricing tools which, when coupled with historical
performance data (also proprietary), can achieve extremely high
execution rates for bringing loans to market. For example, one
version of the proprietary pricing tools and proprietary
performance data helped the inventors achieve a 97% execution rate
when bringing loans to market.
[0013] These and other embodiments of the present invention help
lower transaction and opportunity costs, enabling embodiments of
the present invention to consolidate and dominate this fragmented
and rapidly expanding market.
[0014] In at least one embodiment, the invention provides a method
for trading financial products over a computer network. Seller
information is received from a first client, the seller information
relating to a financial product offered for sale on behalf of a
seller, at least some of the seller information comprising due
diligence information, the due diligence information capable of
fulfilling at least a portion of a request for due diligence on the
financial product. The seller information about the financial
product is stored in a database. A second client is provided with
an opportunity to obtain the due diligence information on behalf of
a potential buyer of the financial product. A bid is stored for the
financial product from the second client in the database, if it can
be shown that second client has obtained the due diligence
information.
[0015] Embodiments of this aspect can include the following. In one
embodiment, the due diligence information comprises an electronic
representation of a physical due diligence document, such as an
electronic image substantially replicating the physical due
diligence document. In one embodiment, the second client can
request information relating to the financial product, including
the due diligence information. In one embodiment, the second client
can be provided with a list of financial products offered for sale,
and in one embodiment the second client can search for financial
products offered for sale that meet a condition, such as a
condition specified by the second client. In at least one
embodiment, the second client can place a bid on the financial
product, and in at least one embodiment the bid can be accepted on
behalf of the seller.
[0016] In at least one embodiment, the above method further
includes the step of computing a price for the financial product.
The price is based at least in part on at least one of the
following: market information (which can, for example, include at
least one indicator selected from the group consisting of U.S.
Federal Funds rate, U.S. prime rate, bond rate, U.S. treasury bill
rate, U.S. treasury bond rate, U.S. treasury note rate, S&P 500
index, Dow Jones Industrial Average, and NASDAQ Combined Composite
Index), seller information, due diligence information, and trade
history information (which can, for example relate to at least one
bid for a financial product that was accepted.)
[0017] In another aspect, at least one embodiment of the invention
provides a computerized exchange for trading financial products,
wherein the exchange is accessible using a computer network,
comprising a server, a pricing engine, and a database. The server
is in operable communication with a client and is programmed for
receiving requests from a client to price a financial product
offered for sale. The pricing engine is in communication with the
server and computes a price for the financial product offered for
sale, the price based at least in part on at least one of the
following: market information, information that the seller has
provided about the financial product; information that the client
provides about the financial product, due diligence information,
and trade history information. The database stores information
relating to the least one financial product offered for sale and
the computed price for that financial product.
[0018] In another aspect, in at least one embodiment, the invention
comprises a computerized system for trading financial products,
comprising means for receiving information about at least one
financial product for sale, the information including due diligence
information capable of fulfilling at least a portion of a request
for due diligence on the financial product; means for computing a
price on the financial product, the price based at least in part on
at least one of the following: market information, information
received about the financial product, due diligence information,
and trade history information; means for providing a potential
bidder on the financial product with the due diligence information
and a price for the financial product; and means for storing a bid
on the financial product if the bidder has received the due
diligence information on the financial product.
[0019] The foregoing and other objects, aspects, features, and
advantages of the invention will become more apparent from the
following description and from the appendices.
BRIEF DESCRIPTION OF THE FIGURES
[0020] The advantages and aspects of the present invention will be
more fully understood in conjunction with the following detailed
description and accompanying drawings, wherein:
[0021] FIG. 1 is an illustration of a computer system in which at
least one embodiment of the present invention can be embodied;
[0022] FIG. 2 is a block diagram giving an architectural overview
in accordance with one embodiment of the invention;
[0023] FIG. 3 is a block diagram providing an overview of the
interaction of the system of an embodiment of the invention with
buyers, sellers, and third parties;
[0024] FIG. 4 is a flow chart illustrating a process for pricing
financial product, in accordance with an embodiment of the
invention;
[0025] FIGS. 5A through 5D are representative screen shots
illustrating a form for sellers to list a financial product, in
accordance with an embodiment of the invention;
[0026] FIG. 6 is a flow chart illustrating a process for searching
for a financial product, in accordance with an embodiment of the
invention;
[0027] FIG. 7 is a representative screen shot illustrating an input
form used to search for a financial product, in accordance with an
embodiment of the invention;
[0028] FIG. 8 is a representative screen shot illustrating the
results of a search for a financial product, in accordance with an
embodiment of the invention;
[0029] FIG. 9 is a representative screen shot illustrating the
financial product information provided to a user, in accordance
with an embodiment of the invention;
[0030] FIG. 10 is another representative screen shot illustrating
the financial product information provided to a user, in accordance
with an embodiment of the invention;
[0031] FIG. 11 is a representative screen show illustrating
financial product summary information provided to a user, in
accordance with an embodiment of the invention;
[0032] FIG. 12 is a representative screen show illustrating
financial product statistical information provided to a user, in
accordance with an embodiment of the invention;
[0033] FIG. 13 is a representative screen show illustrating
financial product information provided to a user, in accordance
with an embodiment of the invention;
[0034] FIG. 14 is a representative screen shot showing an example
of a portion of the mortgage note documentation available to a
user, in accordance with an embodiment of the invention;
[0035] FIG. 15 is a representative screen shot showing an example
of a portion of the title insurance documentation available to a
user, in accordance with an embodiment of the invention;
[0036] FIG. 16 is a representative screen shot showing an example
of a picture of a property associated with a financial product for
sale, which picture is available to a user, in accordance with an
embodiment of the invention;
[0037] FIG. 17 is a representative screen shot showing an example
of third party information available to a user in accordance with
an embodiment of the invention;
[0038] FIG. 18 is a flowchart illustrating a process for searching
a database of financial products, in accordance with an embodiment
of the invention;
[0039] FIG. 19 is a flowchart illustrating a process for pricing a
financial product, in accordance with an embodiment of the
invention;
[0040] FIG. 20 is a representative screen shot illustrating a form
for pricing a financial product, in accordance with an embodiment
of the invention;
[0041] FIG. 21 is a representative screen shot illustrating a form
for performing a computation on a financial product, in accordance
with an embodiment of the invention;
[0042] FIG. 22 is a representative screen shot illustrating the
results of the computation requested in the screen shot of FIG. 21,
in accordance with an embodiment of the invention;
[0043] FIG. 23 is a representative screen shot illustrating a
spreadsheet showing yearly cash flow, in accordance with an
embodiment of the invention;
[0044] FIG. 24 is a representative screen shot illustrating a form
for performing a foreclosure computation on a financial product, in
accordance with an embodiment of the invention;
[0045] FIG. 25 is a representative screen shot illustrating the
results of the computation requested in the screen shot of FIG. 23,
in accordance with an embodiment of the invention;
[0046] FIG. 26 is a representative screen shot illustrating a form
for performing an extension/restructure computation on a financial
product, in accordance with an embodiment of the invention;
[0047] FIG. 27 is a representative screen shot illustrating the
results of the computation requested in the screen shot of FIG. 25,
in accordance with an embodiment of the invention;
[0048] FIG. 28 is a representative screen shot illustrating a form
for performing a DPO/Early Payoff computation on a financial
product, in accordance with an embodiment of the invention;
[0049] FIG. 29 is a representative screen shot illustrating the
results of the computation requested in the screen shot of FIG. 27,
in accordance with an embodiment of the invention; and
[0050] FIG. 30 is a flowchart illustrating a process for bidding on
a financial product, in accordance with an embodiment of the
invention.
[0051] The drawings are not necessarily to scale, emphasis instead
generally being placed upon illustrating the principles of the
invention.
DETAILED DESCRIPTION
[0052] As used herein, the Internet refers at least to a collection
of networks and gateways that use the transmission control
protocol/Internet protocol (TCP/IP) suite of protocols to
communicate with one another. The World Wide Web (WWW) refers at
least to a set of inter-linked hypertext documents residing on
hypertext transport protocol (HTTP) servers. As used herein, the
WWW also refers at least to documents accessed on secure servers,
such as HTTP servers (HTTPS), which provide for encryption and
transmission through a secure port. WWW documents, which may be
referred to herein as web pages, can, for example, be written in
hypertext markup language (HTML). As used herein, the term "web
site" refers at least to one or more HTML documents and associated
files, scripts, and databases that may be presented by an HTTP or
HTTPS server on the WWW. The term "web browser" refers at least to
software that lets a user view HTML documents and access files and
software related to those documents.
[0053] Systems and methods in accordance with the invention can be
implemented using any type of general purpose computer system, such
as a personal computer (PC), laptop computer, server, workstation,
personal digital assistant (PDA), mobile communications device,
interconnected group of general purpose computers, and the like,
running any one of a variety of operating systems. An example of a
general-purpose computer system 10 usable with at least one
embodiment of the present invention is illustrated in FIG. 1.
[0054] Referring briefly to FIG. 1, the general purpose computer
system 10 includes a central processor 12, a main memory unit 14
for storing programs and/or data, an input/output controller 16, a
network interface 18, a display device 20, one or more input
devices 22, a fixed or hard disk drive unit 24, a floppy disk drive
unit 26, a tape drive unit 28, and a data bus 30 coupling these
components to allow communication therebetween.
[0055] The central processor 12 can be any type of microprocessor,
such as a PENTIUM processor, made by Intel of Santa Clara, Calif.
The display device 20 can be any type of display, such as a liquid
crystal display (LCD), cathode ray tube display (CRT), light
emitting diode (LED), and the like, capable of displaying, in whole
or in part, the outputs generated in accordance with the systems
and methods of the invention. The input device 22 can be any type
of device capable of providing the inputs described herein, such as
keyboards, numeric keypads, touch screens, pointing devices,
switches, styluses, and light pens. The network interface 18 can be
any type of a device, card, adapter, or connector that provides the
computer system 10 with network access to a computer or other
device, such as a printer. In one embodiment of the present
invention, the network interface 18 enables the computer system 10
to connect to a computer network such as the Internet.
[0056] Those skilled in the art will appreciate that computer
systems embodying the present invention need not include every
element shown in FIG. 1, and that equivalents to each of the
elements are intended to be included within the spirit and scope of
the invention. For example, the computer system 10 need not include
the tape drive 28, and may include other types of drives, such as
compact disk read-only memory (CD-ROM) drives. CD-ROM drives can,
for example, be used to store some or all of the databases
described herein.
[0057] In at least one embodiment of the invention, one or more
computer programs define the operational capabilities of the
computer system 10. These programs can be loaded into the computer
system 10 in many ways, such as via the hard disk drive 24, the
floppy disk drive 26, the tape drive 28, or the network interface
18. Alternatively, the programs can reside in a permanent memory
portion (e.g., a read-only-memory (ROM)) chip) of the main memory
14. In another embodiment, the computer system 9 can include
specially designed, dedicated, hard-wired electronic circuits that
perform all functions described herein without the need for
instructions from computer programs.
[0058] In at least one embodiment of the present invention, the
computer system 10 is part of a client-server system, in which a
client sends requests to a server and a server responds to requests
from a client. That is, the computer system 10 can be either a
client system or a server system. In one embodiment, the invention
is implemented at the server side and receives and responds to
requests from a client, such as a reader application running on a
user computer.
[0059] The client can be any entity, such as a the computer system
10, or specific components thereof (e.g., terminal, personal
computer, mainframe computer, workstation, hand-held device,
electronic book, personal digital assistant, peripheral, etc.), or
a software program running on a computer directly or indirectly
connected or connectable in any known or later-developed manner to
any type of computer network, such as the Internet. For example, a
representative client is a personal computer that is x86-,
PowerPC.RTM., PENTIUM-based, or RISC-based, that includes an
operating system such as IBM.RTM., LINUX, OS/2.RTM. or MICROSOFT
WINDOWS (made by Microsoft Corporation of Redmond, Wash.) and that
includes a Web browser, such as MICROSOFT INTERNET EXPLORER,
NETSCAPE NAVIGATOR (made by Netscape Corporation, Mountain View,
Calif.), having a Java Virtual Machine (JVM) and support for
application plug-ins or helper applications. A client may also be a
notebook computer, a handheld computing device (e.g., a PDA), an
Internet appliance, a telephone, an electronic reader device, or
any other such device connectable to the computer network.
[0060] The server can be any entity, such as the computer system
10, a computer platform, an adjunct to a computer or platform, or
any component thereof, such as a program that can respond to
requests from a client. Of course, a "client" can be broadly
construed to mean one who requests or gets the file, and "server"
can be broadly construed to be the entity that downloads the file.
The server also may include a display supporting a graphical user
interface (GUI) for management and administration, and an
Application Programming Interface (API) that provides extensions to
enable application developers to extend and/or customize the core
functionality thereof through software programs including Common
Gateway Interface (CGI) programs, plug-ins, servlets, active server
pages, server side include (SSI) functions and the like.
[0061] Embodiments of the invention can be implemented using
computer technologies such as software applications,
computer-readable program media, data structures, carrier wave
signals, user interfaces, and application program interfaces. For
example, software embodying the present invention, in one
embodiment, resides in at least one application running on the
computer system 10. In at least one embodiment, the present
invention is embodied in a computer-readable program medium usable
with the computer system 10. In at least one embodiment, the
present invention is embodied in a data structure stored on a
computer or a computer-readable program medium. In addition, in one
embodiment, the present invention is embodied in a transmission
medium, such as one or more carrier wave signals transmitted
between the computer system 10 and another entity, such as another
computer system, a server, a wireless network, etc. The present
invention also, in an embodiment, is embodied in an application
programming interface (API) or a user interface. In addition, the
present invention, in one embodiment, is embodied in a data
structure.
[0062] In at least one embodiment, the invention provides a system
that enables interaction between a number of parties that can
participate in transactions involving financial products, such as
debt transactions. In accordance with at least one embodiment of
the invention, analysts, buyers and sellers of debt, and other
interested parties can access a computerized system via a website
or portal, over a computer network to access a variety of debt
related features and functions. At least some embodiments of the
invention provide features and functions whereby potential buyers
can search for, view information about, obtain documentation for,
originate, and bid on, financial products, such as commercial
loans, offered for sale by sellers. In addition, at least some
embodiments of the invention provide features and functions whereby
potential sellers can upload information about, list, compute a
price for, provide documentation for, originate, and accept bids on
financial products, such as commercial loans. Further, at least
some embodiments of the invention permit users, including buyers,
sellers, and entities that are neither buyers nor sellers, to
search for, price, and obtain information about financial products
for sale.
[0063] Throughout the following description, the terms "buyer" and
"bidder" are used interchangeably, although it should be understood
that at least some embodiments of the invention, as described
herein, the "buyer" is the "bidder" that wins the bidding
process.
[0064] FIG. 2 is a block diagram giving an architectural overview
of a system 30 implemented in accordance with one embodiment of the
invention. The system 30 of FIG. 2 is made available, in at least
one embodiment, through a web site accessible to users of a global
information network such as the Internet. The system 30, in one
embodiment, includes a set of infrastructure components (Web Server
32, Application Server 34, database management system (DBMS) 36,
and Content Management System 38), Application Components,
including Custom Application Components 40 and Off-The-Shelf
Application Components 42, Administration Components 44 and
Database Components including Transaction Data 46, Financial
Product Information 48, and User Profiles 50. Each component or
subsystem of the system 30 can be in operable communication with at
least one other component of the system 30, as necessary.
[0065] In one embodiment of the invention, the Web Server 32
includes the Microsoft Internet Information Server (IIS),
manufactured by Microsoft Corporation, Redmond, Wash. The server
software for the Microsoft IIS uses HTTP to deliver WWW documents,
incorporates various functions for security, permits common gateway
interface (CGI) programs, and provides for Gopher and file transfer
protocol (FTP) services. However, those skilled in the art will
recognize that other types of web server software may be used for
the Web Server 10 in accordance with the invention.
[0066] The Application Server 34, in at least one embodiment,
includes Microsoft Active Server Pages (ASP), which enable server
side scripting (versus client-side scripting). An ASP can, for
example, contain code written in visual basic script (VB Script) or
JavaScript (Jscript). The Application Server 20 can also comprise
other types of application server programs such as Unix-based CGI
scripts.
[0067] The DBMS 36, in one embodiment, is achieved using the
Microsoft structured query language (SQL) system, but other DBMS
systems, such as those manufactured by Oracle and Sybase, are of
course usable in accordance with the invention. The content pages
of the Content Management System 38, in one embodiment, include a
plurality of content pages, such as content pages displaying
financial product information, due diligence documents, and third
party information. Examples of some of these content pages are
provided herein. In one embodiment, the content pages include HTML
templates and pages for dynamic and static content pages, a splash
page, pages for each of the site divisions (e.g., consumer home
page and related pages, service provider home page and related
pages), link pages, and general content pages. This list of content
pages is not limiting; those skilled in the art will of course
recognize that many other types of content pages can be provided in
accordance with the invention.
[0068] Referring again to FIG. 2, the Custom Application Components
40, includes components developed to accomplish some of the
functions of the system 30 described herein. In at least one
embodiment, the Custom Application Components 40 includes
components such as User Management 52, Content Management 54,
Financial Product Management 56, Transaction Management 58,
Marketing Reports 60, Search/Filter 62, Pricing Engine Pricing
Engine 64, and a Notifier 66.
[0069] User Management 40 is a subsystem providing user management
functions for users of the system 30. These users, in at least one
embodiment, can be sellers and potential sellers of financial
products, buyers and potential buyers of financial products,
so-called market observers (users who can view the transactions
occurring on the site and/or the financial products available on
the site, but who are not necessarily participating in any
transactions), visitors, "guest" users, auditing personnel, etc.
For example, in at least one embodiment, the User Management 40
subsystem provides interface to data such as user profile data,
user preference data, stored search/filter results, lists of
financial products for which a user has purchased due diligence or
other information, a user registration component to handle initial
site registration, login/authentication functions, an interface
that allows a system administrator or quality control person to
"activate" the ability for a Buyer or Seller to conduct
transactions, and the like.
[0070] Content Management 54 is a subsystem providing interface to
the Content Management System (CMS) 38 that allows for the
management of all of the content related to financial products
listed with the system 30. Content Management 54, in at least one
embodiment, includes a dynamic data-driven user content display
component to handle access to and display of the site content based
on the type of user (buyer, Seller, Quality Control Rep, Admin,
etc.). In addition, Content Management 54, in one embodiment,
includes an interface permitting the management and download of
templates used by Sellers to prepare the documentation for
financial products they want to sell, along with the ability to
upload this information to the site. Examples of this interface are
provided herein.
[0071] Financial Product Management 56 is a Subsystem for allowing
a Seller to specify a financial product (e.g., loan, security,
certificate of deposit, mutual fund, etc.), a Buyer to specify the
type of financial product she is interested in buying, and the
function to match Buyers to Sellers based on the criteria specified
by each. Financial Product Management 56, in at least one
embodiment, includes screens and forms used to collect information
about the financial product from the Seller. For example, Financial
Product Management 56 can include features such as financial
product summaries, detailed financial product information (such as
pictures, maps, text and spreadsheets), which can be provided by
the Seller, a third party, and/or the administrator of the system
30, and financial product pricing. In addition, Financial Product
Management 56, in one embodiment, includes all screens and logic to
display financial product information to potential Buyers. These
features and functions are illustrated and described more fully
herein.
[0072] Financial product pricing, in accordance with the invention,
can be determined in a number of different ways, as will be
described herein. For example, in at least one embodiment, the loan
pricing is determined using the Pricing Engine subsystem 64,
described more fully herein. In at least one embodiment, the
financial product pricing is determined by an analyst (i.e., a
person). In at least one embodiment, the financial product price is
determined using a combination of information from both the Pricing
Engine Pricing Engine 64 and the analyst. However, in at least one
embodiment, the Pricing Engine Pricing Engine 64 is entirely
automatic. Pricing Engine Pricing Engine 64
[0073] In one embodiment of the invention, financial product
information is provided in summary form to a prospective Buyer or
other user. The summary form, in one embodiment, is generated
automatically, using templates a user receives from information
provided in forms filled out by a Seller. In at least one
embodiment, the summary form of financial product information is
created at least in part by an individual accessing the
information. Buyers can obtain detailed information and/or
materials (e.g., due diligence information, such as certificates of
insurance, etc) about a given financial product, as well. In at
least one embodiment, a fee is charged for at least some of the
detailed information about the financial product for sale. In
addition, in one embodiment of the invention, Buyers cannot bid on
or purchase a financial product for sale unless the system 30 has
proof that the Buyer has at least been provided with the
appropriate due diligence information. This feature, provided in at
least one embodiment of the invention, can help to satisfy National
Association of Securities Dealers (NASD) requirements. For example,
in one embodiment, this proof is satisfied by a Buyer's purchasing
the due diligence materials. Examples of these materials and this
process are discussed in more detail herein.
[0074] In at least one embodiment, Financial Product Management 56
includes an interface permitting a Seller to upload financial
product data and materials and request the generation of a detailed
financial product summary for a specific financial product the
Seller is offering for sale, so that potential buyers can have
access to that information. As noted previously, the generation of
the detailed financial product summary can be automated,
accomplished by one or more persons, or a combination of the two.
In at least one embodiment, selected individuals (called "Quality
Control" representatives and managers) are assigned to manage and
monitor one or more financial products associated with one or more
Sellers, so in at least this embodiment, the Financial Product
Management 56 includes screens and logic to allow a Quality Control
Representative to view the list of financial products he/she is
responsible for and for a Quality Control Manager to allocate and
assign loans to Quality Control Representatives.
[0075] For example, a Quality Control Representative can assist a
bidder with questions the bidder has about a financial product for
sale, any information about or documentation for the financial
product, the bidding process, or about the seller of the financial
product. Quality Control Representatives, in one embodiment, have
access to at least a portion of the Seller 102 and Buyer 100
information (including, for example, lists of financial products
that a Buyer 100 has bid on, lists of documentation associated with
a given financial product, etc.), and can monitor the bidding
process for one or more financial products. Quality Control
Managers, in one embodiment, have access to at least a portion of
the Seller 102 and Buyer 100 information, as well, and further have
access to and can monitor the actions of the Quality Control
Representatives.
[0076] Transaction Management 58, in one embodiment, is a subsystem
that provides for the handling and tracking of financial product
transactions, such as between Buyers and Sellers. Transaction
Management 58 includes substantially all screens and logic to allow
a Buyer to bid on or to buy a specific financial product offered by
a Seller and can allow the Seller to accept or reject a specific
bid from a Buyer. In at least one embodiment, Transaction
Management 58 includes logic and/or rules that permit the system 30
to take action on behalf of a Buyer or a Seller. For example,
Transaction Management 58 can include logic whereby it is
authorized to accept a bid from a Buyer on behalf of a Seller if a
specified condition (e.g., price) is met. In a similar example,
Transaction Management 58 can include logic whereby it is
authorized to place bids for a financial product on behalf of a
Buyer, in accordance with one or more conditions.
[0077] In one embodiment, Transaction Management 58 includes logic
to implement one or more types of auctions of a financial product
offered for sale, including sealed-bid format and "English" auction
format. In one embodiment, the sealed bid format presents the
bidder (also referred to herein as the Buyer) with a form to enter
the bid and provide any contingencies to the bid (e.g., "This bid
is valid if the seller can substantiate that the borrower is
willing to close on Sep. 19, 2001"). In the English auction format,
bids are accepted without contingencies.
[0078] In one embodiment, Transaction Management 58 can also
include the logic and screens required to allow Buyers and Sellers
to close the transaction (either by completing it or aborting it)
using the system 30. In at least one embodiment, however, closing
the transaction is accomplished outside of the system 30.
[0079] Referring again to FIG. 2, Marketing Reports 60 includes
logic and forms to interface with tools such as Crystal Reports
(available from Crystal Decisions, Inc. of Palo Alto, Calif.) and
the like to generate "AdHoc" Marketing Reports. In one embodiment,
the Marketing Reports 60 includes design and implementation within
Crystal Reports or similar tool of approximately 12 standard
Marketing Reports.
[0080] The Search/Filter subsystem 62 is a component that matches
user-provided search criteria with Seller--provided financial
product information previously uploaded to the system 30. In one
embodiment, searches (also referred to herein as a financial
product "filter," e.g., "loan filter") are filtered by one or more
criteria. For example, the Search/Filter subsystem 62 of one
embodiment can filter searches by criteria such as Geographic
Location, Loan Type, Loan Amount, Interest Rate Range, Maturity
Status, Loan Quality (four subcategories), and/or other criteria,
as those skilled in the art will appreciate. Examples of searches
and filtering in accordance with an embodiment of the invention are
provided herein. In one embodiment, the Search/Filter subsystem 62
includes substantially all forms and logic to perform the search
function and present the information back to the user (e.g., a
Buyer) conducting the search.
[0081] The Pricing Engine Pricing Engine 64 is a subsystem that
computes a price for the loan. In at least one embodiment, the
Pricing Engine 64 uses loan data received from the Seller,
information (such as the current prime interest rate) obtained from
third parties, historical financial product trade information,
and/or information provided by an Analyst to generate data that is
used to compute a price for the loan. For example, in one
embodiment, such data is provided to a spreadsheet program, such as
MICROSOFT EXCEL (available from Microsoft Corporation of Redmond,
Wash.), to price the loan. The resulting calculations are stored in
the Financial Product Information database 48 and thereby made
available to the Buyers, the Seller, Analysts or Quality Control
Reps.
[0082] The Pricing Engine Pricing Engine 64, in one embodiment,
includes substantially all screens and logic to allow a user to
specify the loan to "price". In one embodiment, the Pricing Engine
Pricing Engine 64 also bases its computations on additional loan
pricing parameters, such as those provided by a Seller or an
Analyst. In one embodiment, the Pricing Engine Pricing Engine 64
includes a "back-end" process that runs an instance of MICROSOFT
EXCEL using the loan data, captures the MICROSOFT EXCEL output, and
stores the information in the Financial Product Information
database 48. Examples of the operation of the Pricing Engine
Pricing Engine 64, in accordance with an embodiment of the
invention, are provided herein. The Pricing Engine Pricing Engine
64, in one embodiment, includes logic to generate notifications to
parties (e.g., Buyers, Sellers, etc.) to a transaction or potential
transaction.
[0083] In at least one embodiment, the Pricing Engine 64 can
provide a substantially "quick" estimate of the value of a
financial product. This feature is referred to in the example
embodiment shown herein as "Quick Price". The price estimate is
based at least in part on one or more assumptions, such as that a
given financial product will perform according to its stated terms.
This feature is explained more fully herein.
[0084] In one embodiment, a Notifier subsystem 66 generates these
and other notifications. For example, Sellers can be notified, such
as by a telephone call, letter, electronic mail message ("email"),
facsimile ("fax"), automated message, or other appropriate
notification, whenever a Buyer has expressed interest in a
financial product that the Seller 102 is selling, such as when a
Buyer 100 has ordered due diligence materials relating to a
financial product that the Seller 102 is selling. In another
example, a Buyer 100 who has viewed a financial product and/or
ordered information about a financial product can be notified as to
the closing date for bids on a given financial product. In still
another example, a Buyer 100 who has bid on a financial product can
receive notifications as to who has "won" or "lost" the bidding
process.
[0085] Referring again to FIG. 2, the Off-the-Shelf Application
Components 42 can include virtually any type of application
component, including those regularly used in electronic commerce
web sites, such as Credit Validation 68 and E-Mail 70. Credit
Validation 68, on one embodiment, is an interface to an
off-the-shelf credit card validation system used to handle the
acceptance of payment for information about financial products,
such as detailed financial product summaries, due diligence
information, and other information provided to a Buyer or potential
Buyer. Credit Validation 68, in one embodiment, includes
substantially all forms and logic to allow the Buyer to initiate
the interaction with the Credit Validation 68 to authorize the
purchase, such as via a credit card or other suitable payment
mechanism
[0086] In accordance with one embodiment of the invention, E-Mail
70 is an "Off-the-shelf" component (such as MICROSOFT OUTLOOK) used
to allow a Buyer, Seller, or other entity to receive alerts from
the system when events impacting a financial product occur. For
example, a Buyer can receive notification when new due diligence
materials become available, when a condition to the loan (e.g.,
term) has changed, when a bid higher than the Buyer's bid has been
submitted, etc. E-Mail 70, in one embodiment, includes logic that
detects these events and includes software to generate the e-mail
using the commercial e-mail package.
[0087] The Administration Components 44 of at least one embodiment
of the invention include Administration 72, Configure Site 74, and
User Administration 76. Administration 72 is the administration
tools used with the system 30. For example, in one embodiment the
administration tools are the standard administrative tools provided
with the Web Server 32, Application Server 34, DBMS 36, and
Off-the-Shelf Components 42. In another embodiment, depending on
the final reporting requirements, Administration Components 44
include tools such as third party site monitoring or usage
analysis/reporting tools.
[0088] Configure Site 74 is, in one embodiment, a site
configuration component. This is a set of tools to enable an entity
such as a Site Administrator to configure the web site associated
with the system 30. Depending on specific requirements, these tools
can be developed as a web-based application or as a standalone
client/server application.
[0089] User Administration 76 is, in one embodiment, a user
administration component and includes a set of tools to enable an
entity such as a Site Administrator to administer users. User
Administration 76 provides add, delete, and modify functions.
Depending on specific requirements, User Administration 76 can, for
example, be a web-based application or as a standalone
client/server application.
[0090] The components of the database for the system 30, in
accordance with one embodiment of the invention, include databases
for Transaction Data 44, Financial Product Information 48, and User
Profiles 50. Transaction Data 44 contains information used to track
all transactions that occur on the site between Buyers and Sellers
of financial products. Transaction Data 44 allows entities such as
Quality Control personnel to obtain transaction history of any
financial product offered for sale in connection with the system
30. As will be explained herein, the transaction history is, in one
embodiment, used to help compute a price for a financial
product.
[0091] Financial Product Information 48 is a database containing
information on each financial product submitted to the site and, in
at least one embodiment, includes links to all associated
supporting materials for a given financial product (e.g., due
diligence materials, summary information, related third party
information such as maps, demographic profiles, and the like).
[0092] User Profiles 50 is a database containing user profile
information. In at least one embodiment, User Profiles 50 stores
"site-wide" user attributes such as username/password, Buyer
preferences, Seller preferences, payment information, etc. This
information may vary depending on the type of user (e.g., Buyer vs.
Seller vs. Quality Control, etc.).
[0093] In one embodiment, the configuration of FIG. 2 is
implemented using at least two web servers, two application
servers, and two database servers. In this embodiment, this
configuration can be used regardless of whether NT or UNIX is used
as the technology platform. This configuration has the ability to
scale by adding additional web servers, application servers,
database servers and bandwidth. Moreover, these technology
platforms have the ability to scale by adding additional
processors, memory and disk space. In addition, in another
embodiment, the database is segmentable and scaleable.
[0094] In yet another embodiment, the invention is implemented with
fault tolerant features. For example, failure of the web servers
and application servers of the system 30 are covered by complete
machine redundancy (each of the initial machines is identical)
coupled with an appropriate load balanced solution (such as the
LOCAL DIRECTOR available from Cisco Systems of San Jose,
Calif.).
[0095] In another example, failure of the database servers of the
system 30 is covered by use of reliable components with built in
redundancy (power supplies, CPUs, memory) as well as complete
machine redundancy. In still another example, using a redundant
array of independent disks (RAID) for the database and disk
mirroring for the Web servers covers disk failure.
[0096] In still another embodiment, the system of the invention is
hosted at an appropriate data center (such as Exodus, NaviSite,
PSINet, and the like) with firewall services, load balancing
services, burstable bandwidth, room for growth and appropriate
network/infrastructure redundancy.
[0097] FIG. 3 is a block diagram providing a perspective of how the
system 30 of an embodiment of the invention fits into an
environment of buyer/bidders 100, sellers 102, and third parties
104. The buyer/bidders 100 (referred to herein interchangeably as
"buyers" and "bidders") are entities, such as individuals or
organizations, which want to buy or bid on a financial product.
[0098] In accordance with one embodiment of the invention, a Buyer
100 is an entity, such as a person, organization, or other user of
the system 30, who is interested in getting information about (and
possibly purchasing) a financial product, such as a loan, offered
for sale by another. A Buyer can bid on financial products
available for sale by Sellers 102. In one embodiment, the category
of Buyers 100 includes both those entities that have registered
with the system 30 ("registered Buyers") and those who have not
("Guests"). In one embodiment of the invention, Guests have limited
ability to access the information that is available to registered
Buyers. Also, FIG. 3 illustrates, the system 30 is capable of
interacting with any number of buyer/bidders 100 and sellers 102.
Although only four third parties 104 are illustrated in FIG. 3, any
number of third parties 104 can interact with the system.
[0099] In accordance with one embodiment of the invention, a Seller
102 is an entity, such as a person or organization, offering one or
more financial products, such as loans, for sale. A Seller 102 also
can be an entity, such as a broker or agent, authorized to act on
behalf of another entity selling a financial product.
[0100] A third party 104 is, in accordance with one embodiment of
the invention, an entity, such as a person or organization,
providing information to the system 30 that is usable and/or useful
during a financial product transaction. Some of this information
can, for example, include "background" information of interest to a
Buyer 100, such as statements and documents from insurance
companies insuring a Seller 102, demographic organizations
providing information about a physical location associated with a
given financial product, etc. Third parties 104 also can include
suppliers of information used to price financial products, such as
financial websites providing information such as Federal Money
Funds rates. Those skilled in the art will recognize that,
depending on the financial product involved, many different types
of third parties can provide information that can be of use in a
transaction involving the financial product.
[0101] Other parties and entities (not shown in FIG. 3) that can
interact with the system 30 include Analysts, Marketing personnel,
Quality Control Personnel, and Site Administrators.
[0102] An Analyst is an entity that, in at least one embodiment,
computes prices for financial products for sale by Sellers based on
factors that can include the profile of the loan, historical
information, and external information. In one embodiment of the
invention, the Analyst also can use a "black box" pricing
calculator, such as one provided by another third party, or even
the Pricing Engine Pricing Engine 64 of FIG. 2. In at least one
embodiment, the invention does not necessarily use an analyst and
instead automatically computes prices for a financial product. This
feature is described more fully herein.
[0103] Marketing is, in one embodiment, an internal user associated
with the administrator/owner of the system 30 and/or its associated
website. This party can monitor Buyer/Seller activity and interests
with an existing contact management system, such as ACT!, which is
available from Internet Commerce Corporation of Scottsdale,
Ariz.
[0104] Quality Control Personnel, in one embodiment of the
invention, includes Quality Control Representatives and Quality
Control Managers. The Quality Control Representative is an internal
user associated with the administrator/owner of the system 30, who
can, if necessary, facilitate the relationship between Buyers 100
and Sellers 102. This facilitation can, in one embodiment, include
contacting the parties to resolve questions and disputes either may
have. The Quality Control Manager is an entity, such a person, that
can allocate loans among Quality Control Representatives.
[0105] In accordance with at least one embodiment of the invention,
analysts, Buyers 100 and Sellers 102 of financial products, and
other interested parties can access the system 30 via a website or
a portal, over a computer network to access a variety of financial
product related features and functions. For example, in the case of
a loan for sale, a Buyer 100 can view a Loan Summary page
(described more fully below) to view summaries of available loans
and to get news related to loans, both specifically and generally.
The Buyer 100 can also search for loans using one or more
criteria.
[0106] Table 1 describes at least some of the types of features and
services provided by a system implemented in accordance with one
embodiment of the invention. In the example of Table 1, the feature
or function is shown along with the parties that can use the
feature or function. These features and functions can, for example,
be implemented as functions accessible to a user via "buttons",
pull-down menus, links, and the like, provided on a web page. Many
of these features and functions are illustrated and described in
greater detail herein.
[0107] It should be understood, however, that Table 1 is not
intended to limit the scope of the types financial product-related
functions and features provided in accordance with the invention.
Those skilled in the art will recognize that the features and
functions of Table 1 are merely representative of the types of
features and functions that can be provided and that many other
features and functions will occur to those skilled in the art. In
addition, those skilled in the art recognize that, in some
embodiments, a given feature or function may not be accessible to a
given type of user, or may be accessible to more or different users
than listed. TABLE-US-00001 TABLE 1 Services Offered in one
embodiment of the invention Actor Feature Description/Action Buyer
Financial product View financial product summaries. Get general
financial product-related Summary Page News. Buyer Financial
product Search for financial product by: Geographic location,
Financial product Search Type, Financial product Quality (four
subcategories), Financial product Amount, interest rate, Maturity
status, other dimensions as understood by those skilled in the art.
The search criteria can be stored for each registered user and can
become part of the profile. Buyer Price a Financial View financial
product information within preset templates determined by product
business rules. Information presented can be filtered by profile
and search criteria. Buyer Buyer Profile Collect information such
that manual buyer qualification process can be performed by
personnel associated with the owner/administrator of the portal of
the invention. Buyer Detailed Financial Views an overview of the
information about a financial product he/she may product be
interested in purchasing. This information can be in the form of
pictures, maps, text, and spreadsheets and can be available for
view by a registered Buyer after the Buyer's payment is approved
(for example, by credit card debit or payment plan confirmation).
Buyer Detailed Documents Views online detailed financial product
documents, which may be in PDF- format or any other usable document
format. In one embodiment, this information can be available in
preview form (the first few pages of the detailed document) or in
its entirety. Buyer Submit Bid Allow a Buyer to submit all
information required to bid on the specified financial product.
Buyer Closure Provide ability for Buyer to close the financial
product by receiving an Invoice and Wiring and/or payment
information. Buyer Alerts Provide an alerting capability to send
alerts to the Buyer when events impact his (potential) bid on
financial products. For example, the alerts may include: a matching
of Buyer criteria to an available financial product, updates in bid
status, updates in financial product terms, Seller response
(filtered by QC), existence of competing bids. Seller Request to
Price a Allows a Seller to create a financial product profile and
enter criteria about Financial product the financial product for
pricing by an Analyst. In one embodiment, this feature includes a
calculator with counts (like that on Stock Xchange). Seller List a
Price Establish an intent to sell a financial product by
establishing a price for the financial product and specifying a
means of payment. Seller Seller Profile Collect information such
that personnel associated with the owner/administrator of the debt
management system, website, or portal can perform a manual seller
qualification. Seller Download Financial Mechanism for Seller to
download and standard financial product data product Templates
templates that he can use to provide standard information about a
financial product. In one embodiment, these templates can be
templates associated with word processing and/or spreadsheet
applications, such as Microsoft Word and Microsoft Excel templates.
Seller Upload Financial Ability of a Seller to upload standard
financial product information data in a product Data predetermined
format, such as PDF format. In one embodiment, the data uploaded to
the site is in PDF format files built from Microsoft Word and
Microsoft Excel templates downloaded from the site. For example,
this data can be original Financial product data or updates to
Financial product data (if the Seller resells the Financial
product). One reason for providing this material is so that the
system (and/or an Analyst) can assemble a Detailed Summary Document
after a request to do so is received from the Seller. Seller
Request Detailed Ability of a Seller to request an Analyst to
create a Detailed Financial product Summary Document Summary of the
financial product the Seller is offering, so that it is available
to potential Buyers. Seller Closure Provide ability for Seller to
close the financial product deal. Seller Alerts Provide an alerting
capability to send alerts to the Seller when events impact his
financial product. In one embodiment, these alerts include: changes
in valuation, confirmation of financial product pricing by the
Analyst, queries from Buyers, Bids made (highest Bid information).
Analyst Generate Detailed Generates a financial product's Detailed
Summary Document at the request of Summary Document a Seller and
thereby makes the financial product available for sale to Buyers.
Analyst Price Financial Calculates the price range of a financial
product using the financial product product profile provided by the
Seller and a "black box" calculator associated with the
owner/administrator of the web site. This process can be performed
manually or automatically. Marketing Run Reports Runs reports that
compare the Buyer/Seller activity against the existing (ACT)
contact management tool. QC Rep Qualify Seller Use Seller-provided
profile information and manual process to verify identity and
billing information of a Seller. Perform an action on the site that
"activates" a Seller who has previously registered on the site. QC
Rep Qualify Buyer Use Buyer-provided profile information and manual
process to verify identity and billing information of a Buyer.
Perform an action on the site that "activates" a Buyer who has
previously registered on the site. QC Rep Financial product
Simple-to-do list used to track the financial products the QC is
responsible Queue for. QC Rep Report Report capability to monitor
the status of financial products. QC Rep Overview Process
Capability to track and monitor detailed financial product status
to moderate Buyer/Seller interaction. QC Rep QC Log Ability to view
the activity log for a given financial product in order to track
dependencies and Buyer/Seller interaction. QC Mgr. Manage Financial
Allocates and assigns financial products to Quality Control Reps
and tracks product Assignments their status. Site Admin Suite of
administrative tools to enable site administrator to operate and
Admin monitor system. In one embodiment, includes basic site
controls (e.g. start, stop, etc.), basic monitoring, usage
reporting, etc. Site User Admin Add, delete, or modify User
Profiles Admin
[0108] Although the examples for pricing, trading, analyzing,
buying, and selling financial products described herein are
provided using the example of a commercial loan, the example of
loans is not limiting. As noted previously, the type of financial
product for sale can be virtually any type of financial product,
including commercial and residential loans, lines of credit,
savings accounts, securities, bonds, insurance products, annuities,
certificates of deposit, student loans, personal loans, and the
like. The financial product can be a single product (e.g., a single
loan) or a group of products (e.g., a group of loans, or a group of
various types of financial products). Moreover, as described
herein, at least some of the other types of actions provided by
systems and methods of the present invention (such as pricing a
financial product and bidding on a financial product) are similarly
usable with at least some of these types of financial products.
[0109] FIG. 4 is a flow chart illustrating a process for pricing a
financial product, in accordance with an embodiment of the
invention. A Seller 102, for example, can use this process to
determine a price for the financial product he is selling.
Referring to FIGS. 2, 3 and 4, the process of FIG. 4 begins when
the system 30 receives the request of a Seller 102 to list a
financial product for sale (step 100). The Seller 102 can send the
request to the system 30 by sending a message from a computer, such
as a personal computer or workstation, over a computer network, to
the system 30. In one embodiment, this is done by the Seller 102
going to a web page associated with the system 30, and accessing
various functions on the web page using links, buttons, pull down
menus, etc., located on the web page.
[0110] When the system 30 receives the request (step 100), it
provides one or more forms to the Seller 102, such as pricing
forms, so that the Seller 102 can provide the system 30 with some
of the information needed to compute a price for the financial
product. FIGS. 5A through 5D are representative screen shots
illustrating forms 282, 284, 286, 288 that the system 30 provides
to the Seller 102, in accordance with an embodiment of the
invention. In one embodiment, the forms 282, 284, 286, 288 are
constructed and arranged to automatically upload information that a
Seller 102 has stored in another file, such as a spreadsheet file.
In one embodiment, the system 30 stores a profile of the Seller
102, such that portions of the forms 282, 284, 286, 288 can be
"filled out" by the system in advance (e.g., "Seller's reference
Number, Seller's name, etc.). The profile of a Seller 102, in one
embodiment, also stores other information provided by a Seller 102,
such as preferences, criteria for accepting bids, restrictions on
bids (e.g., certain users may be prohibited from bidding),
restrictions on access to information (bidders may be required to
sign on and/or acknowledge specific conditions before receiving
information), specification of type of bidding to occur (e.g., type
of auction), permission for the system 30 to accept bids on behalf
of the Seller 102, etc. This type of information also can be
provided in the forms 282, 284, 286, 288.
[0111] Referring again to FIG. 4, after the system 30 sends the
forms 282, 284, 286, 288 to the Seller 102 (step 110) and receives
a response (step 120), the system 30 can compute a price for the
financial product. In at least one embodiment, the Pricing Engine
64 uses data and characteristics about the financial product to
compute the price for the financial product. The data and
characteristics can include, but are limited to, parameters such as
terms, time periods, conditions, locations, appraisals, discounts,
liens, status, sponsors, servicing type, status, maturity,
principal balance, financial product type, origination date,
monthly payment, maturity date, interest rate, interest accrual
method, and performance level.
[0112] As part of the price computation, the system 30 retrieves
historical trade data (step 130) that it has stored relating to
prior trades. For example, the system 30 can use Transaction
Management 58 and query its Transaction Data database 46 (FIG. 2)
to retrieve this data. This data helps the system 30 to analyze the
relationship and similarity between the financial product being
offered for sale and previous trades of financial products having
one or more similar characteristics. For example, a Seller 102 may
be listing a residential mortgage for a property with an
outstanding loan balance of $310,000, an interest rate of 8.65%, a
30-year term, with an excellent payment history, which is located
in a suburban community. The system 30 could then search for prior
trades of other residential mortgages sharing some or all of these
characteristics. The prior trade history could, for example,
provide data such as cents on the dollar that the mortgage sold for
on the secondary market and what factor(s) had the greatest impact
on the price of the mortgage.
[0113] Based on the retrieved historical trade data, the system
performs regression analysis (step 14) using both the historical
trade data and the seller's inputs, to get an estimate for how at
least a portion of the various characteristics of the financial
product affects the price of the financial product. Based on the
results of the regression analysis, the system 30 then assigns a
scaling factor (step 150) to at least a portion of the
characteristics (i.e., the various fields on the forms 282, 284,
286, 288). The system 30 also takes into account external variables
(step 150), such as the U.S. Federal Funds rate, U.S. prime rate,
bond rate, U.S. Treasury bill rate, U.S. Treasury bond rate, U.S.
Treasury note rate, S&P 500 index, Dow Jones Industrial
Average, and NASDAQ Combined Composite Index. The system 30 can be
provided with external variables from virtually any known source of
the information, including trade journals such as the WALL STREET
JOURNAL, BLOOMBERG BUSINESS NEWS, etc. In one embodiment, the
system 30 can automatically retrieve the information from a known
location (such as on a computer network). In one embodiment, a user
such as a system administrator also can provide the information to
the system 30 via manual input.
[0114] Referring again to FIG. 4, the system 30 computes a price
for the financial product (step 180) and provides the price to the
Seller 102 (step 180). If the Seller 102 accepts the computed price
(step 190), the system 30 stores the computed price as the selling
price (step 200) of the financial product. In at least one
embodiment, if the Seller 102 has accepted the computed price, the
financial product is identified as a "sponsored" product (step 210)
and is stored as such. "Sponsored," in one embodiment, indicates to
potential Buyers 100 at least that the price of the financial
product can be relied on as having the approval of the entity
sponsoring the website of the system 30.
[0115] The price computed in FIG. 4 can, in one embodiment, provide
a benchmark for a Seller 102 to determine what price is appropriate
for the financial product it is selling, given current market
conditions and historical trade data. Sellers 102 can revisit the
process of FIG. 4 at any time and can get a price appropriate to
the market conditions and trade history then in existence. This
feature may help Sellers 102 recognize the true market value of
their financial products.
[0116] If, however, the Seller 102 does not accept the computed
price, the system 30 prompts the Seller 102 for its own price (step
230), which the system 30 receives and stores as the listed price
for the financial product (step 240). In at least one embodiment,
financial products having seller-provided prices are identified in
such a manner that potential Buyers 100 can determine that the
financial product is not "sponsored" (step 250). In at least one
embodiment, such products are labeled as "direct events".
[0117] After the system 30 has a price for the financial product
(whether the system 30 computes it or whether the Seller 102
provides it), the system 30 prepares a summary of the financial
product based on the information it has about the financial product
(step 260). In one embodiment, the summary is created by taking
selected inputs from the forms 282, 284, 286, 288 and putting them
into a predetermined template. In at least one embodiment, the
financial product summary is created automatically by the system
30, without human intervention. In one embodiment, the summary is
created in whole or in part by a person, such as an Analyst (as
described previously) who reviews the information to create the
financial product summary. Examples and illustrations of the loan
summary are provided herein (see, for example, FIG. 11 which
illustrates an example screen shot of a loan summary for an example
loan for sale, in accordance with an embodiment of the
invention.)
[0118] The system 30 also prepares a set of documentation on the
financial product being offered for sale (step 280), so that
potential Buyers 100 can view the documents and conduct any
necessary due diligence. These documents include, for example,
documents, such as those shown in Table 2 (which by way of example
only shows documents used for a loan for sale): TABLE-US-00002
TABLE 2 Documents provided for a Financial Product Document 1:
Table of Contents 2: Narrative 3: Statistics For Purchase 4: Note
5: Mortgage/Security Agreements 6: Guaranty 7: Assignments 8: UCC
9: Title Insurance 10: Environ. Indemnity Agreement 11: Property
Condition Asses. 12: Appraisal 13: Environ. Site Assessment 14:
Other Collateral Information 15: Other Sponsor Information
[0119] Unlike known systems and web site that simply act as
"bulletin boards," in at least one embodiment, the invention
provides the unique ability to perform the entire due diligence
process online. Buyers 100 and other investors are immediately able
to review complete, original loan documentation and other critical
information directly through the system 30 of the invention,
eliminating the time and costs associated with traditional due
diligence methods. In addition to immediate information access, the
features and advantages of the some embodiments of the invention
(including at least the "Quick Price", feature, the financial
product computation tools, module, Forward Loan workflow tools, and
automated email alerts that notify users when information on a
selected financial product is updated) as described herein, may
facilitate the evaluation and workflow processes associated with
trading financial products.
[0120] In one embodiment, the system 30 queries the Seller 102 for
the necessary documents, which the Seller 102 can provide to the
system in many different ways, including electronic transmission,
physical mailing of the actual documents (in paper form, on
diskette or CD-ROMs, etc). In at least one embodiment, the Seller
102 can upload some or all of the information, which can include
standard financial product information data, to the system 30 in
predetermined formats such as MICROSOFT WORD, MICROSOFT EXCEL,
ADOBE ACROBAT, and the like. In at least one embodiment, the
seller-provided information includes due diligence information that
is capable of fulfilling at least a portion of a buyer's need for
due diligence on the financial product. In at least one embodiment,
the due diligence information comprises an electronic
representation of a physical due diligence document, such as an
electronic image substantially replicating the physical due
diligence document. This is accomplished, in at least one
embodiment, by using a document format such as PDF. In at least one
embodiment, the due diligence information is scanned to create
electronic image files representing the physical due diligence
documents.
[0121] In one embodiment, the data uploaded to the site is in PDF
format files built from Microsoft Word and Microsoft Excel
templates downloaded from the system 30. For example, this data can
be original financial product data or updates to financial product
data (if the Seller 102 resells the financial product).
[0122] After the necessary documentation and financial product
information is received, the system 30 organizes the information
(step 280) for viewing and/or purchase by entities such as
potential Buyers 100. In at least one embodiment, the system 30
uses a standardized format to organize the documents and/or the
financial product summary, so that those accessing financial
products have a consistent view and interface. The system 30 also
can, if applicable, add links to information from third parties 104
that is of interest and/or relevant to the financial product
offered for sale. Examples of these documents are provided and
described herein (see, for example, FIGS. 9-17).
[0123] FIG. 6 is a flow chart illustrating a process for searching
for a financial product, in accordance with an embodiment of the
invention. Any user of the system 30, including Buyers 100, Sellers
102, third parties 104, visitors, and site administrators can
conduct this search. The search can locate, for example, financial
products listed with the system 30 using the process of FIG. 4.
[0124] Referring to FIGS. 2, 3, and 6, the system 30 receives a
request from a user for a financial product (step 300). The request
can be a request for all listed financial products or can be a
request for financial products meeting one or more criteria. For
example, in one embodiment, when a user accesses the system 30, if
the user has a profile stored on the system 30, and the profile
lists loan criteria, the system 30 can automatically bring up
financial products meeting the stored criteria. Although not shown
here, in one embodiment, a user may store the results of previous
searches and bring those searches up, as part of step 300.
[0125] The request of step 300, in one embodiment, is in the form
of a search form, presented, for example, as part of a graphical
user interface (GUI). For example, in one embodiment, the system 30
displays a search form capable of receiving user inputs. FIG. 7
illustrates a representative screen shot of a search input form 500
used to search for a financial product, in accordance with an
embodiment of the invention. The search form 500 shown in FIG. 7 is
provided by way of example only. Those skilled in the art will
appreciate that many different types of form and inputs can be used
for querying for a financial product meeting a user's requirements.
For example, in one embodiment, the system 30 can store a profile
of a given user, where the profile specifies criteria that a user
may have concerning financial products of interest and, based on
that profile, conduct a search for financial products,
automatically or upon request by a user.
[0126] Referring again to FIG. 6, based on the search criteria, the
system 30 retrieves search results from its databases (step 310).
If there are no matches (step 320), the system notifies the user
(step 330) and, if the user wants to search again (e.g., using
different criteria) (step 340), the system 30 conducts the search
again. If the user does not want to search again, the process
ends.
[0127] If there were matches to the search (step 320), the system
provides the results to the user (step 350). FIG. 8 is a
representative example screen shot illustrating the search results
502 resulting from a search for a financial product, in accordance
with an embodiment of the invention. As FIG. 8 illustrates,
selected information is provided about the financial products for
sale, including the status of the financial product (e.g.,
"Available" or "Under Agreement"), the loan balance, the type, etc.
In this example, a price for the financial product is not provided.
As explained further herein, users are able to compute a price for
the financial product based on specific requirements and terms. As
with the processes of computing a price for Sellers 102, Buyers 100
can use at least one embodiment of the invention to determine an
appropriate price for a given financial product, given the current
market conditions and the trade history.
[0128] Referring again to FIG. 6, a user can request further
information, including due diligence materials, about any financial
product listed in the search results (step 360). In at least one
embodiment of the invention, if the user making such a request is
not registered with the system 30 (step 370), the user is prompted
to register (step 380) and, if the prompt is accepted (step 390),
the appropriate steps are taken to register the user (step 400). If
the user declines to register, the process ends and further
information about the financial product is not provided.
Registration can require the user to provide specific types of
information and may require the user to sign or otherwise
acknowledge certain obligations, such as confidentiality
obligations, relating to the information to be provided to the
user.
[0129] Registration can include the user reviewing the terms of his
or her registration, and, if desired, can review the terms in
another format, such as PDF. At this point, the newly registered
user can be added to the system 30 using various techniques. For
example, the user might be required to print out form, fill it in,
and return it to the administrator of the system 30, the system can
automatically enroll the user to the system, or the user can be
added to the system using a combination of automatic enrollment and
filling out forms. Those skilled in the art will appreciate that
many different methods for registering users and assigning
corresponding authentication information (for example, a username
and password) are within the spirit and scope of the invention.
[0130] The process shown in steps 370,380, 390, and 400 also can be
used, in one embodiment, to obtain additional information from
users (registered or otherwise) where applicable. For example, a
Seller 102 may have as a condition of its listing the requirement
that the system obtain certain additional information from a user
before providing some or all of its loan information to a user.
[0131] Referring to FIG. 6, when the necessary conditions (e.g.,
registration or other conditions) are met, the system 30 provides
information about the financial product to the user (step 410). A
user can, in one embodiment, request this information by "clicking"
on a specific listing 504 in the results 502. FIGS. 9 and 10 are
representative screen shots illustrating examples of the financial
product information provided to a user, in accordance with an
embodiment of the invention. As FIGS. 9 and 10 illustrate, the
types of information include (but are not limited to) an overview
of the financial product, a summary of key information about the
financial product, images of collateral (where applicable), a list
of documentation available for the financial product (for free or
for purchase), and terms of sale. Of course, those skilled in the
art recognize that the information provided in the examples of
FIGS. 9 and 10 is not limiting.
[0132] In one embodiment, a user can obtain a "Quick Price" 508
(FIG. 9) on a loan. To provide this, the system 30 performs a
computation similar to the pricing computation performed in the
process of FIG. 4, and can give a loan price to a user cents on the
dollar, basis points, or other suitable measure.
[0133] In one embodiment of the invention, the financial product
information includes listings for financial products called
"Brokered events." Brokered events are identified by the specific
broker sponsoring the deal and are subject to that broker's
parameters, including bid type, setting the Reserve Price (if any)
documentation, disclosure, and Asset Sale Agreement. Each broker
that lists a financial product provides the system 30 with a
written statement describing its offering philosophy. That
statement can be posted on-line in this section.
[0134] Referring again to FIG. 6, the system 30 also can provide
more information to the user about the listed financial product,
such as loan documentation (step 420) necessary for a buyer's due
diligence. A user can obtain this information by clicking on the
"buy documents" link 510 shown in FIG. 9. In some embodiments, the
system 30 charges the user a fee for these documents. FIGS. 11
through 17 are representative screen shots illustrating some of the
types of information that can be provided. FIG. 11 is a
representative screen shot illustrating financial product summary
information provided to a user, in accordance with an embodiment of
the invention. FIG. 12 is a representative screen shot illustrating
financial product statistical information provided to a user, in
accordance with an embodiment of the invention. FIG. 13 is a
representative screen show illustrating financial product
collateral information provided to a user, in accordance with an
embodiment of the invention. FIG. 14 is a representative screen
shot showing an example of a portion of the mortgage note
documentation available to a user, in accordance with an embodiment
of the invention. FIG. 15 is a representative screen shot showing
an example of a portion of the title insurance documentation
available to a user, in accordance with an embodiment of the
invention. FIG. 16 is a representative screen shot showing an
example of a picture of a property associated with a financial
product for sale, which picture is available to a user, in
accordance with an embodiment of the invention.
[0135] In addition, in at least one embodiment of the invention,
the financial product information provided by a Seller 102 is
supplemented with value-added information provided by another
entity, such as the administrator of the system 30 and/or third
party information. FIG. 17 is a representative screen shot showing
an example of third party information available to a user in
accordance with an embodiment of the invention. In FIG. 17, the
example third party information includes general information
provided relating to a geographic area where the collateral for a
given financial product may be located.
[0136] Referring again to FIG. 9, when appropriate, a user can go
from the financial product summary page to a bid process (such as
that described in the process of FIG. 30), using the bid link 512.
However, in at least one embodiment of the invention, the system 30
tracks whether or not a Buyer 100 who is attempting to bid on a
financial product has obtained the due diligence materials. One
reason for doing this is to insure that the Seller 102 and/or the
system 30 have satisfied NASD requirements for disclosure prior to
the sale of a financial product.
[0137] In at least one embodiment of the invention, if a user has
obtained loan information, such as due diligence materials, the
system 30 can provide the user with automatic updates for any
additional information relevant to (or that the system 30 receives)
about the loan. The updates can, for example, be provided
periodically, or as needed, or at the request of a Seller 102, or
at the request of a Buyer 100.
[0138] Referring again to FIG. 6, the user can take other actions
after receiving the results of the search (step 310). For example,
the user can compute a price for a listed financial product (step
430), which is explained more fully herein. This can be a "quick
price" as described herein, or can be another pricing mechanism,
such as that described below. If the time to bid for a financial
product is approaching or is a predetermined amount of time away
(e.g., three days), the system 30 notifies the user reviewing the
information (steps 450 and 460).
[0139] A user can also submit questions to the system 30 about a
financial product and/or any documentation that the user has
received about the financial product (step 470). The queries can be
submitted in many different ways, including via a message sent over
a computer network, such as an email, via a telephone call or fax
to an administrator of the system 30, via a letter, or any other
suitable means of communication. The system 30 can respond to the
queries (step 480) in similarly varied ways, and need not respond
to the user in the manner in which a query was received. If
necessary, in at least one embodiment, although not illustrated in
FIG. 6, the system 30 can query a Seller 102 for any information or
responses needed to respond to the query of a user. If the system
30 has updated financial product information (step 490) to provide
to a user, it can do so.
[0140] In at least one embodiment, the user can perform actions on
the search results not illustrated here, such as "HIDE" and
"UNHIDE". With the "HIDE" function, a user may filter the list of
search results further by "hiding" any financial products that are
not of interest. In this situation, subsequent user searches will
not display "hidden" loans. At any time, a user can "UNHIDE" search
results to view all posted loans that meet his search criteria.
[0141] It should be understood that, in accordance with various
embodiments of the invention, steps 410 through 490 can be done in
virtually any order and need not be completed in the order
shown.
[0142] In at least one embodiment of the invention, the system 30
can perform searches of financial products automatically on behalf
of any entity for which the system 30 has stored a set of
preferences or a profile. This type of search can be done on a
periodic basis, or every time a new financial product for sale or
information about a financial product for sale is added to the
system 30, or any time any characteristic of a financial product
changes, or on a basis set by a user (e.g., weekly, daily, etc.).
FIG. 18 is a flowchart illustrating a process for automatically
searching a database of financial products, in accordance with an
embodiment of the invention.
[0143] The system 30 receives one or more bidder preferences (step
550), representing one or more criteria that a bidder has for the
type of financial product he is looking for. In at least one
embodiment, the bidder himself provides the bidder preferences. In
at least one embodiment, the system 30 extrapolates at least one
bidder preference based on the profile of the bidder. In at least
one embodiment, the system extrapolates at least one bidder
preference based on a bidder's trading history.
[0144] The system 30 selects at least one preference on which to
search (step 560), and searches its databases for financial
products meeting the criteria in whole or in part (step 570). If no
matches are located (step 580), the system can modify the criteria
on which it searches (steps 590, 600). For example, if no matches
were found using five criteria specified by a bidder, the system 30
could attempt a search using just four of the five criteria. In at
least one embodiment, a user can specify whether or not the system
30 can attempt such changes to the criteria.
[0145] If matches were found (step 580), the system 30 can still
attempt to determine whether the search should be expanded (step
610). For example, if just one or two matches were located, the
system 30 may attempt to modify the criteria to expand the results
to some predetermined number of matches (step 620).
[0146] The system 30 notifies bidders of any matches (or lack
thereof) (step 630), and can, if desired, store the results of its
searches (step 640). The notification can be by any suitable means,
including email messages, postings to a personalized web page
(which the system 30 can maintain for a bidder), telephone
messages, fax messages, pager messages, letters, so-called
"Instant" messages sent to a mobile communications device, and the
like. The stored results can be used, for example, at a later time,
such as when a bidder logs on to the system 30 and seeks more
information about the financial products being sold.
[0147] As noted previously, users of the system 30 (including at
least Buyers 100, Sellers 102, and visitors/others) can price
financial products offered for sale on the system 30. FIG. 19 is a
flowchart illustrating a process for pricing a financial product,
in accordance with an embodiment of the invention.
[0148] A user of the system can submit a request to the system 30
to price a financial product (step 700), and the system 30 provides
the user with a pricing model form (step 710). FIG. 20 is a
representative screen shot illustrating a pricing form 810 for
pricing a financial product, in accordance with an embodiment of
the invention. As FIG. 20 indicates, users input the
characteristics of the financial product they are interested in
purchasing, such as the type of product, the principal balance,
etc. Generally, the characteristics the user enters correspond to
the information that the user has received about a financial
product. However, in at least one embodiment, the user's entries
can deviate from the listed information. For example, a user may
want to calculate a cash flow for a financial product that assumes
a different interest rate than currently listed for the
product.
[0149] The system 30 receives the pricing computation request (step
730), and, if requested (step 740) computes a price (step 750) for
the financial product. In at least one embodiment, the computation
is done in substantially the same way as the computation done for a
seller seeking a price (see FIG. 4). For example, in FIG. 20, if
the user presses the "calculate" button 812, the system 30 returns
a calculated price, such as in cents on the dollar, basis points,
or other suitable measure, for the value of the financial product.
FIG. 21 is a representative screen shot illustrating a form for
performing a computation on a financial product, in accordance with
an embodiment of the invention, and FIG. 22 is a representative
screen shot illustrating the results of the computation requested
in the screen shot of FIG. 21, in accordance with an embodiment of
the invention. In FIG. 22, the computation results in a price of
"99.3 cents on the dollar" for the listed financial product, which
is a loan having a principal balance of five million dollars,
performing as agreed.
[0150] Referring to FIG. 19, if the user request "cash flow" (step
760) the system 30 computes a cash flow, such as monthly or
annually (step 770). FIG. 23 is a representative screen shot
illustrating a spreadsheet showing yearly cash flow, in accordance
with an embodiment of the invention.
[0151] Referring to FIG. 19, in at least one embodiment of the
invention, a user can compute the price of a financial product
based on addition parameters (step 780), which the user can provide
or which the system 30 can provide (step 790). For example, the
system 30 provides pull down menus permitting users to perform
computations such as foreclosure, extension/restructure, and Direct
Pay Off (DPO)/Early Payoff.
[0152] FIG. 24 is a representative screen shot illustrating a form
for performing a foreclosure computation on a financial product, in
accordance with an embodiment of the invention, and FIG. 25 is a
representative screen shot illustrating the results of the
computation requested in the screen shot of FIG. 23, in accordance
with an embodiment of the invention.
[0153] FIG. 26 is a representative screen shot illustrating a form
for performing an extension/restructure computation on a financial
product, in accordance with an embodiment of the invention, and
FIG. 27 is a representative screen shot illustrating the results of
the computation requested in the screen shot of FIG. 25, in
accordance with an embodiment of the invention.
[0154] FIG. 28 is a representative screen shot illustrating a form
for performing an DPO/Early Payoff computation on a financial
product, in accordance with an embodiment of the invention, and
FIG. 29 is a representative screen shot illustrating the results of
the computation requested in the screen shot of FIG. 27, in
accordance with an embodiment of the invention. Of course, the
options provided are by way of example only and are not limiting.
The additional parameters that can change the price computation can
vary depending on the financial product.
[0155] At least one embodiment of the invention permits users to
bid on a financial product offered for sale. FIG. 30 is a flowchart
illustrating a process for bidding on a financial product, in
accordance with an embodiment of the invention. The invention is,
in one embodiment, implemented in accordance with a standard
bidding police to enable users to bid on a loan. In at least one
embodiment the Seller 102 can specify a bidding policy to be
applied to a given financial product. Table 3 lists examples of
bidding policies usable in accordance with some embodiments of the
invention: TABLE-US-00003 TABLE 3 Example Bidding Policy Sealed Bid
Bids must be received on or before the stated bid deadline and are
not reviewed prior to the deadline. No bidder is aware of other bid
amounts or conditions. A Sealed Bid forum may or may not be subject
to a Reserve Price. Modified Sealed Bid Financial product is
offered firm at a specified price for a specified period. Converts
to Sealed Bid after firm offer period expires. Open Auction Bids
are received on an ongoing basis up to the bid deadline. All bids
and conditions are posted for all existing and potential bidders to
review. Bidders may make multiple bids on any financial product
provided that each subsequent bid is an improvement over the most
recent bid submitted. An Open Auction may or may not be subject to
a Reserve Price. Indicative Indicative bidding is generally a
two-stage process whereby the seller/broker solicits a first round
indication of what a buyer might pay for an asset. After a review
of the indicative bids, the seller/broker generally chooses one or
more bidders to confirm or improve their bid, usually requiring
this be done within a specified period of time. The bidders chosen
to participate in this second round are generally chosen based upon
their bids and the seller/broker's opinion of their ability to
close. Negotiated Buyers and Sellers negotiate the final sale
price. This may be conducted before or after a request for
Indicative Bids. Firm Offer A firm price is listed and the
financial product will not sell until a bidder agrees to the listed
price. The seller has the right to accept or reject nonconforming
bids.
It should be understood that the invention can be implemented to
accommodate virtually any transaction format that a Seller 102,
Buyer 100, or other party (e.g., broker) wishes to utilize.
[0156] Referring again to FIG. 30, when the system 30 receives a
bid for a financial product (step 850), the system checks to ensure
that the bidder has obtained the appropriate documentation (e.g.,
due diligence materials) associated with the financial product
(step 860). In at least one embodiment, the system 30 can confirm
whether or not the user has received all updates (if any) to the
due diligence materials, as well. If the bidder has not obtained
these materials (either by purchasing them from the system 30 or by
otherwise proving to the system 30 that the bidder has obtained
and/or reviewed the materials), the system 30 notifies the bidder
that the bidder cannot bid until due diligence materials/update due
diligence materials are obtained (step 870) and prompts the user to
order them or to otherwise obtain them (step 880 and Steps 910,
920). If the bidder declines this prompt (step 890), the process
ends and the system 30 does not proceed further with the user's
bid. If the bidder accepts the prompt, the system 30 can provide
the bidder with the required due diligence materials/due diligence
updates (step 900). Although FIG. 30 illustrates the process ending
for the bidder at that point, the bidder can, in one embodiment,
restart the process at step 850, now that the bidder has acquired
the required due diligence materials.
[0157] The system 30 also checks to determine whether or not there
are conditions on the financial product being offered that may
affect the bid and/or the bidder (steps 930, 940). For example, a
given Seller 102 may have a condition prohibiting one or more
specific bidders (or types of bidders) from being able to bid on a
given financial product. If the bid conditions are not met (step
940), the bidding process ends for that bidder. In at least one
embodiment, if a bidder and/or a bid are denied because of a
condition on the bid or bidder, the system 30 provides a
notification (step 950).
[0158] If bidding is not yet closed (step 960), the bid is added to
a list of bids (step 970), which can, in one embodiment, be
presented to a Seller 102. The list of bids can also be maintained
by the system 30 for the system 40 to select a "winning" bid, in
accordance with one or more conditions. If more bids are received
(step 980) while bidding remains open (step 990), each bid is
similarly evaluated as recited for steps 850 through 960, described
above. Although not illustrated in FIG. 30, if a bidder's bid is
added to the list of bids, the system 30 can notify the bidder
and/or other interested parties (e.g., the Seller 102) as to that
fact.
[0159] If bidding is closed before a bid is accepted, in at least
one embodiment, the system 30 notifies the bidder (step 1000).
[0160] Once bidding is closed, the system 30 can, in at least one
embodiment, apply one or more bid rules (step 1010) to the list of
bids to determine a winning bid, or to determine whether any bids
meet the requirements of the bidding rule(s) (step 1010). For
example, if a Seller 102 imposes a condition to accept the "highest
price" bid, the system 30 will determine that from the list of
bids. Those skilled in the art will appreciate that other
conditions are usable within the spirit and scope of the
invention.
[0161] In one embodiment, once bidding is closed, the system 30
provides the list of bids to the Seller 102, and the Seller 103 (or
any entity designated by the Seller 103, such as a broker or other
agent) can determine a winning bid.
[0162] If no bids are accepted (step 1020), the system 30 can, if
desired by the Seller 102, conduct a new round of bidding (step
1030). This can occur, for example, when a Seller 102 decides to
change one or more parameters, decides to change the mix of
financial products in a pool, decides to wait longer for
different/better bids, if a Seller 102 authorizes it, etc. This
also can occur automatically, such as if a Seller 102 specifies
this in advance. If this occurs, the appropriate parties (e.g.,
bidders and potential bidders, the Seller 102, etc.) are notified
(step 1040) and the process ends, to be restarted at step 850. If a
new round of bids is not requested (step 1030), the process
ends.
[0163] If a bid is accepted (step 1020), the system 30 notifies
appropriate parties about the bid outcome (step 1050). This
notification can be just to the Buyer 100 and Seller 100, or can,
if authorized, be sent to all "losing" bidders.
[0164] Thus, it can be seen that at least some embodiments of the
present invention provide an efficient marketplace for trading
financial products, such as commercial debt, and may provide an
open, market-driven exchange that reduces transaction costs,
compresses transaction cycles, and enables extended buyer and
seller participation in the markets such as the secondary
commercial debt market. In at least one embodiment, the invention
provides a pricing model that gives sellers an indication of an
asset's market value given its individual characteristics and
prevailing market conditions.
[0165] By posting financial products to websites and portals
associated with some embodiments of the invention, sellers of
financial products are able to reach the broadest qualified
investor audience in the most efficient manner. In addition, buyers
and other investors in financial products benefit from the ability
to access and evaluate investment opportunities from a central
location.
[0166] Variations, modifications, and other implementations of what
is described herein will occur to those of ordinary skill in the
art without departing from the spirit and the scope of the
invention as claimed.
[0167] It should be understood that virtually any aspect of the
embodiments of the invention described herein can be implemented
using software, hardware, or in a combination of hardware and
software. For example, at least the listed descriptions of "logic,"
referenced herein can be implemented in hardware, software or a
combination.
[0168] As those skilled in the art will recognize, the invention
described herein can be modified to accommodate and/or comply with
any one or more of the above-described technologies and standards.
In addition, variations, modifications, and other implementations
of what is described herein can occur to those of ordinary skill in
the art without departing from the spirit and the scope of the
invention as claimed.
[0169] It should be understood that, in the Figures of this
application, in some instances, a plurality of system elements or
method steps may be shown as illustrative of a particular system
element, and a single system element or method step may be shown as
illustrative of a plurality of a particular systems elements or
method steps. It should be understood that showing a plurality of a
particular element or step is not intended to imply that a system
or method implemented in accordance with the invention must
comprise more than one of that element or step, nor is it intended
by illustrating a single element or step that the invention is
limited to embodiments having only a single one of that respective
elements or steps. In addition, the total number of elements or
steps shown for a particular system element or method is not
intended to be limiting; those skilled in the art will recognize
that the number of a particular system element or method steps can,
in some instances, be selected to accommodate the particular user
needs.
[0170] It also should be noted that the previous illustrations of
screen shots, together with the accompanying descriptions, are
provided by way of example only and are not limiting. Those skilled
in the art will recognize that many different designs of
interfaces, screen shots, navigation patterns, and the like, are
within the spirit and scope of the invention.
[0171] Although the invention has been described and pictured in a
preferred form with a certain degree of particularity, it is
understood that the present disclosure of the preferred form, has
been made only by way of example, and that numerous changes in the
details of construction and combination and arrangement of parts
may be made without departing from the spirit and scope of the
invention as hereinafter claimed.
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