Method and System for Offering Insurance for Loans

Abstract

A method for offering insurance to entities in the mortgage industry that provides coverage for financial loss as a result of, for example, material inaccuracies in the financial information provided by or on behalf of the borrower. The method in at least one embodiment includes the initial insurance application and establishment of an insurance agreement, periodic issuing of individual insurance coverages for particular loans handled by the lender, training and consulting on improved controls for lenders, maintaining an ineligible database of entities and a database of loan information, and handling of claims.

1 . A method for offering insurance to lenders for loan applications and/or loans handled by them, the method comprising:
 receiving a request for insurance from a lender,   receiving information from the lender as part of an insurance application using at least one computer,   sending electronically received information on the lender for obtaining a risk classification based at least on a likelihood of a misrepresentation occurring during the loan application process,   learning the risk classification assigned for the lender using the at least one computer,   analyzing received information together with the risk classification using the at least one computer, and   when a positive analysis results, using the at least one computer
 to set a premium rate to charge the lender based at least on the analysis and the risk classification, and 
 to send an insurance agreement that includes the terms to be agreed to by the lender and conditions, 
 the conditions include
 a guarantee from the lender to use existing controls or improved controls, and 
 the premium rate to be charged for loans that are covered by the insurance agreement. 
 
   
   
   
       2 . The method according to  claim 1 , further comprising electronically issuing a certification for lenders accepted into the insurance program. 
   
   
       3 . The method according to  claim 1 , wherein one condition is payment of a broker fee upon acceptance of the insurance agreement by the lender. 
   
   
       4 . The method according to  claim 1 , further comprising collecting premiums on covered loans based on at least the loan size and the premium rate. 
   
   
       5 . The method according to  claim 1 , further comprising requesting additional information from the lender to clarify previously received information. 
   
   
       6 . The method according to  claim 1 , wherein analyzing includes determining whether the lender is insurable,
 when the lender is not insurable, denying the lender's insurance application, and   the analysis is positive when the lender is insurable.   
   
   
       7 . The method according to  claim 1 , further comprising
 receiving an executed insurance agreement from the lender, and   issuing an insurance policy to the lender.   
   
   
       8 . The method according to  claim 1 , wherein risk classification includes a rating. 
   
   
       9 . The method according to  claim 1 , further comprising
 receiving mortgage production information regarding a plurality of mortgages from the insured lender on a periodic basis,   scrubbing the mortgage production information against at least an ineligible database using the computer to eliminate from coverage under the insurance agreement any mortgages that cause a match with an entry in at least the ineligible database and populating a coverage database with the mortgages to be covered, and   calculating a premium using the computer based on pricing in the insurance agreement for covering any remaining mortgages that are included in the mortgage production information after scrubbing the mortgage production information.   
   
   
       10 . The method according to  claim 1 , wherein the loans are mortgages. 
   
   
       11 . A method for offering insurance to lenders for loan applications and/or loans handled by them, the method comprising:
 receiving a request for insurance from a lender,   receiving information from the lender as part of an insurance application,   determining a risk classification based at least on received information on the lender and a likelihood of a misrepresentation occurring during the loan application process,   analyzing received information together with the risk classification, and   when a positive analysis results,
 setting a premium rate to charge the lender based at least on the analysis and the risk classification, and 
 offering an insurance agreement that includes the terms to be agreed to by the lender and conditions, 
 the conditions include
 a guarantee from the lender to use existing controls or improved controls, and 
 the premium rate to be charged for loans that are covered by the insurance agreement. 
 
   
   
   
       12 . The method according to  claim 11 , wherein information requested from the lender includes information regarding controls used by the lender, loan products offered by the lender, loan channels used by the lender, and geographic markets that the lender is present. 
   
   
       13 . The method according to  claim 11 , wherein risk classification includes a rating. 
   
   
       14 . The method according to  claim 11 , further comprising
 receiving mortgage production information regarding a plurality of mortgages from the insured lender on a periodic basis,   scrubbing the mortgage production information against at least an ineligible database using the computer to eliminate from coverage under the insurance agreement any mortgages that cause a match with an entry in at least the ineligible database and populating a coverage database with the mortgages to be covered, and   calculating a premium using the computer based on pricing in the insurance agreement for covering any remaining mortgages that are included in the mortgage production information after scrubbing the mortgage production information.   
   
   
       15 . A method for offering insurance to lenders for loan applications and/or loans handled by them, the method comprising:
 receiving a request for insurance from a lender,   receiving information from the lender as part of an insurance application,   determining a risk classification based at least on received information on the lender and a likelihood of a misrepresentation occurring during the loan application process,   analyzing received information together with the risk classification, and   when a positive analysis results,
 setting a premium rate to charge the lender based at least on the analysis and the risk classification, and 
 offering an insurance agreement that includes the terms to be agreed to by the lender and conditions, 
 the conditions include
 a guarantee from the lender to use existing controls or improved controls, and 
 the premium rate to be charged for loans that are covered by the insurance agreement. 
 
   
   
   
       16 . The method according to  claim 15 , wherein the risk classification includes a risk rating.