Automated loan evaluation system

Abstract

Disclosed is a system and method of creating a probability of delinquency database using historical loan data and a plurality of loan factors, for use in determining a loan rate, the method comprising: identifying a plurality of multi-level loan factors; creating a pool from the historic loan data, wherein the first pool contains records relating to the plurality of multi-level loan factors; separating the pool into a set of groups based on the multi-level loan factors, calculating a probability of delinquency for each group; and arranging the probability of delinquency for each group into a database such that the probability of delinquency for each group is accessible for any combination of multi-level loan factors. Also disclosed is a system and method of determining the loan rate for a loan for a borrower based on the probability of delinquency database.

1 - 9 . (canceled)  
   
   
       10 . A method of determining the loan rate for a loan for a borrower comprising: 
 (a) determining a payment history of the borrower;    (b) determining a Loan-to-Value (“LTV”) for the borrower;    (c) determining a credit rating for the borrower;    (d) selecting a group of historical data, wherein each element of the group has a historic payment history within a first predetermined amount of the borrower's payment history, a historic credit rating within a second predetermined amount of the borrower's credit rating, and an historic LTV within a third predetermined amount of the borrower's LTV;    (e) determining a first probability of delinquency of the group from an incidence of delinquency for the group;    (f) determining a second probability of delinquency using applicable add-on loan factors;    (g) combining the first probability of delinquency with the second probability of delinquency to determine a total probability of delinquency factor; and    (h) calculating the loan rate for the loan using the total probability of delinquency factor.    
   
   
       11 . The method of  claim 10 , wherein step (d) further comprises: 
 (a) determining a credit grade for the borrower by using a predetermined criteria based on the borrower's payment history;    (b) selecting a credit grade matrix based on the credit grade; and    (c) selecting the first probability of delinquency from the credit grade matrix using the borrower's credit rating and the borrower's LTV.    
   
   
       12 . The method of  claim 10 , wherein step (f) further comprises: 
 (a) determining which add-on factors are-applicable to the borrower,    (b) adding the applicable add-on to determine the total probability of delinquency factor.    
   
   
       13 . The method of  claim 10 , wherein the add-on factors are selected from the group consisting of: alternative documentation, stated documentation, number of units, owner occupation, no mortgage history, combined loan-to-value ratio, cash out, debt-to-income ratio, and bankruptcy.  
   
   
       14 . The method of  claim 10  wherein the loan rate is calculated by a function of: a Funding Rate, an Average Life of the Loan, the total probability of delinquency, an Expected Loss, and a Profit Goal.  
   
   
       15 . The method of  claim 10  wherein the loan rate is calculated by:  
     
       
         
           
             P 
             = 
             
               
                 [ 
                 
                   
                     
                       F 
                       ⁡ 
                       
                         ( 
                         A 
                         ) 
                       
                     
                     ⁢ 
                     C 
                   
                   + 
                   L 
                   - 
                   
                     C 
                     ⁡ 
                     
                       ( 
                       L 
                       ) 
                     
                   
                   + 
                   G 
                 
                 ] 
               
               
                 A 
                 ⁢ 
                 
                     
                 
                 ⁢ 
                 C 
               
             
           
         
       
       Wherein P is the Loan Rate, F is a Funding Rate, A is an Average Life of the Loan, C is (1 minus the total probability of delinquency) multiplied by 100, L is an Expected Loss, and G is a Profit Goal.  
     
   
   
       16 . The method of  claim 10 , wherein the historical data is divided into a plurality of groups divided by payment histories, LTVs, and credit ratings.  
   
   
       17 . The method of  claim 16 , wherein the probability of delinquency for each group of the plurality of groups is computed and stored in a database.  
   
   
       18 . The method of  claim 17  wherein the probability of delinquency for each group is transformed into a loan score.  
   
   
       19 . The method of  claim 18  wherein the database is stored in a matrix format.  
   
   
       20 . The method of  claim 10 , wherein the additional probability of delinquencies are transformed into add-on scores.  
   
   
       21 - 26 . (canceled)