WO2018032037A1

WO2018032037A1 - Systems and methods for handling property-related data

Info

Publication number: WO2018032037A1
Application number: PCT/AU2017/050789
Authority: WO
Inventors: Kent DAVIS
Original assignee: Feldbay Pty Ltd
Priority date: 2016-08-13
Filing date: 2017-07-28
Publication date: 2018-02-22

Abstract

The present invention provides a system for configuring a real property equity release product, the system comprising: a computer and computer-executable software configured to provide a risk-adjusted valuation of a property subject of the real property equity release product. In providing the risk-adjusted valuation of the property, the software may utilize one or more information types useful in quantifying a risk related to the property, obtained from one or more information sources. The one or more information types useful in quantifying a risk related to a property is information useful in determining a risk that the property subject of the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time. The one or more information types are relevant or potentially relevant in predicting future value of the property subject the equity release product.

Description

SYSTEMS AND METHODS FOR HANDLING PROPERTY-RELATED DATA

FIELD OF THE INVENTION

The present invention is directed broadly to the field of data handling. More particularly, the invention is directed to computer-based systems and methods for providing an adjusted property valuation which is used in facilitating the release of equity from a real property so as to provide income to the property owner.

BACKGROUND TO THE INVENTION

In the financial services arts, products known as "reverse mortgages" are known to be useful in providing income for real property owners. These products are in fact loan products having an applicable interest rate applied at a premium, and in some circumstances an interest repayment obligation. In configuring a reverse mortgage the lender typically has regard to a number of parameters in configuring the loan and the interest charged such as the value of the subject property, the age of the owner, the life expectancy of the owner, value of the loan required, the ability or desire of the owner to make regular interest payments (if any), the amount of equity the owner wishes to retain in the property, required regular or lump-sum payments to the property owner, and the like.

The prior art provides many examples of computer-based systems and methods for configuring a reverse mortgage. For example, United States Patent 5,991 ,745 (to KIRITZ) describes systems for calculating monetary payments by a lender to a borrower based on the value of a property asset using constants stored in look-up tables. The process includes inputting borrower information such as borrower birthdate or age. Property specific information is input, such as appraised property value. Equity share information is also input. With the Equity share information and borrower age, the process looks-up a tenure conversion factor from a look-up table.

As another example, United States Patent 6,012,047 (to MAZONAS and MATTOX) describes a data processing system for selectively determining an appropriate balance of credit parameters associated with the issuance of reverse equity mortgage financing. The system structures a concurrent loan product premium deferred annuity to provide future cash flows starting at a system determined date corresponding to actuarially determined requirements of the borrower. The data processing system accepts inputs of the critical data required to perform the calculations and provides a detailed assessment of the proper level of credit and blend of annuity payments for the borrower.

While reverse mortgages may be suitable for some older property owners having income from investments, they are generally not suitable for the many so-called "equity rich/cash flow poor" property owners. These type of interest based equity release products are generally unattractive to the cash flow poor property owner given the potential of compounding interest if the owner fails to make payments. Failure to make payments increases the size of the debt over time and hence erodes equity retention value for the home owner. Conversely, periodic interest payments may negatively impact the cash flows of older property owners, many of whom may already be under financial pressure.

A more attractive equity release product would be configured to ensure a fixed equity retention value and provide for a capital release without impacting a property owner's cash flows, savings or incomes. Furthermore, an attractive product would offer rollover provisions so that older owners may remain living in their homes for as long as they require. Interest rate-based loan products such as reverse mortgages are incapable of providing such outcomes without eroding or threatening the homeowner's equity position. It is an aspect of the present invention to overcome or ameliorate a problem of the prior art by providing computer-based systems and methods for configuring a property equity release product that provides for an improved outcome for the property owner and/or the product provider. In another aspect, the present invention provides a useful alternative to prior art systems and methods.

The discussion of documents, acts, materials, devices, articles and the like is included in this specification solely for the purpose of providing a context for the present invention. It is not suggested or represented that any or all of these matters formed part of the prior art base or were common general knowledge in the field relevant to the present invention as it existed before the priority date of each provisional claim of this application.

SUMMARY OF THE INVENTION

In a first aspect, but not necessarily the broadest aspect, the present invention provides a system for configuring a real property equity release product, the system comprising: a computer, and computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product.

In one embodiment of the system, in providing the risk-adjusted valuation of the property, the software utilizes one or more information types useful in quantifying a risk related to the property.

In one embodiment, the one or more information types is/are obtained from one or more information sources in direct or indirect communication with the computer.

In one embodiment, the one or more information sources are controlled by a party or parties different to the party or parties controlling the computer.

In one embodiment, the one or more information sources are remote to the computer.

In one embodiment, the one or more information types useful in quantifying a risk related to a real property is information useful in determining a risk that the property subject the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time.

In one embodiment, the one or more information types is relevant or potentially relevant in predicting future value of the property subject the equity release product.

In one embodiment, the information type(s) is/are selected from the group consisting of: a property price index, property price indices over a period, location of property subject the equity release product, type of property subject the equity release product, dwelling (if any) size and/or characteristics of the property subject the equity release product, land size and/or characteristics of the property subject the equity release product, economic information, interest rate information, wages information, employment information, demographic information, climate information, regulatory information, town planning information, compulsory acquisition information, legal information, title information, and covenant information.

In one embodiment, the system comprises the use of at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 information types to provide the risk-adjusted valuation In one embodiment, the information sources are controlled by at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 different parties.

In one embodiment, the software is configured to determine a risk-adjusted valuation be reference to (i) a base valuation and (ii) the one or more information types useful in quantifying a risk related to the property.

In one embodiment, the base valuation is determined at least in part by reference to information communicated to the computer from one or more information sources.

In one embodiment, the software is configured to determine a risk value from the information useful in quantifying a risk related to a real property, and then using the risk value to provide the risk-adjusted valuation. In one embodiment, the real property is a residential property.

In one embodiment, the real property is not a commercial property.

In one embodiment, the real property comprises a land component and a building component.

In one embodiment, the system comprises a data validation computer in direct or indirect communication with the computer having computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product, the data validation computer being in direct or indirect communication with the one or more information sources.

In one embodiment, the system comprises an information collation computer in direct or indirect communication with the computer having computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product, the information collation computer being in direct or indirect communication with the one or more information sources.

In one embodiment, the system comprises a computer of, or associated with, an annuity company (Life Office) in direct or indirect communication with the computer having computer- executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product. In second aspect, the present invention provides a computer-implemented method for configuring a real property equity release product, the method comprising the steps of: providing or determining a base valuation of a real property, providing or determining a risk value associated with the real property, and determining a risk-adjusted real property valuation by reference at least in part to the base valuation and the risk value.

In one embodiment of the method, the risk value is provided by, or determined by reference at least in part to one or more information types useful in quantifying a risk related to a real property.

In one embodiment of the method, the one or more information types useful in quantifying a risk related to a real property is information useful in determining a risk that the property subject the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time.

In one embodiment of the method, the one or more information types is relevant or potentially relevant in predicting future value of the property subject the equity release product.

In one embodiment of the method, the information type(s) is/are selected from the group consisting of: a property price index, property price indices over a period, location of property subject the equity release product, type of property subject the equity release product, dwelling (if any) size and/or characteristics of the property subject the equity release product, land size and/or characteristics of the property subject the equity release product, economic information, interest rate information, wages information, employment information, demographic information, climate information, regulatory information, town planning information, compulsory acquisition information, legal information, title information, and covenant information.

In one embodiment of the method, the information types useful in quantifying a risk related to a real property are obtained from at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 information sources.

In one embodiment of the method, the information sources are controlled by at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 different parties. In one embodiment of the method, the real property is a residential property.

In one embodiment of the method, the real property is not a commercial property. In one embodiment of the method, the real property comprises a land component and a building component.

In a third aspect, the present invention provides computer-executable software configured to execute the method as described herein.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a block diagram of a computer system of a preferred form of the invention, showing the interrelationship between the system computer, and computers of external data providers.

FIG. 2 is a block diagram of a computer system of a preferred form of the invention, showing the interrelationship between the system computer, and computers of external data providers, and an information validation computer.

FIG. 3 is a block diagram of a computer system of a preferred form of the invention, showing the interrelationship between the system computer, and computers of external data providers, and an information collation computer.

FIG. 4 is a block diagram of a computer system of a preferred form of the invention, incorporating the use of look-up tables and showing the interrelationship between the information in the look-up tables, and information stored in a remote valuation computer and the central processing unit of the system computer.

FIG. 5 is a block diagram of a computer system of a preferred form of the invention, showing the interrelationship between the system computer, and computers of external data providers, and an annuity originator computer.

FIG. 6 is a diagram showing visually the concept of a risk adjusted equity value remaining fixed over the term of an equity release loan product configured according to the present invention. FIG. 7 is a diagram showing how the system fixed Override Default Value (ODV) limits nett negative growth exposure to the Lender in any year when total negative growth in a year is less than the ODV system fixed value. DETAILED DESCRIPTION OF THE INVENTION

After considering this description it will be apparent to one skilled in the art how the invention is implemented in various alternative embodiments and alternative applications. However, although various embodiments of the present invention will be described herein, it is understood that these embodiments are presented by way of example only, and not limitation. As such, this description of various alternative embodiments should not be construed to limit the scope or breadth of the present invention. Furthermore, statements of advantages or other aspects apply to specific exemplary embodiments, and not necessarily to all embodiments covered by the claims.

Throughout the description and the claims of this specification the word "comprise" and variations of the word, such as "comprising" and "comprises" is not intended to exclude other additives, components, integers or steps.

Reference throughout this specification to "one embodiment" or "an embodiment" means that a particular feature, structure or characteristic described in connection with the embodiment is included in at least one embodiment of the present invention. Thus, appearances of the phrases "in one embodiment" or "in an embodiment" in various places throughout this specification are not necessarily all referring to the same embodiment, but may.

The present invention is predicated at least in part on the finding that an improved or alternative equity release product is provided where a risk-adjusted valuation of the property subject of the equity release product is provided. Typically, the risk-adjusted valuation is provided by computer-based means. Accordingly, in a first aspect the present invention provides a system for configuring a real property equity release product, the system comprising: a computer, and computer-executable software configured to provide a risk- adjusted valuation of the property subject of the real property equity release product. The present systems provide for new methods of engineering a capital and investment construct that ameliorates one or more problems of the prior art.

In particular, the use of computer-based means comprising the use of a risk-adjusted valuation of the property subject of the equity release product allows the product to be configured to be devoid of interest. Because the risk of negative growth, no growth, or low growth in a property is taken account of by the present methods, the equity release product provider may reasonably assume that any interest (of the type normally payable on prior art reverse mortgage products) may be recouped when the property is eventually sold at a higher valuation.

Consideration of a property-associated risk (such as a risk that the property will not substantially increase in value) allows for the product to be successfully applied to properties that are anticipated to experience growth in value (or at least not decrease in value, or decrease substantially in value) and allows for the product to be configured based on a contractual entitlement to future growth in an equity value of the property. Thus, the product provider may provide the property owner with an assurance (for example, by way of contract between the property owner and the product provider) of retaining a fixed equity portion in their property. This is of distinct advantage to the property owner, given the propensity for equity erosion in prior art reverse mortgages as discussed in the Background section herein. Advantage is also provided to the product provider by being able to advance interest free funds to the property owner with no risk of default given an anticipated growth in value of the property and rollover provisions subject the equity release product.

While in some circumstances, the present systems may identify properties with a risk of negative growth, no growth or low growth, such properties may nevertheless be subject of an equity release product. In such situations, the fixed equity to future growth retained by the owner may be decreased.

The present systems allow for the generation of a new asset class of loan products which are configurable so as to provide one or more advantage to the borrower (typically the property owner) and the lender. It will be appreciated from the above that the loans which may be configured by virtue of the present systems are a significant departure from existing reverse mortgage products, and indeed any other loan product which include regular interest payments set at market rate. Prior art loan products may only consider the risk that the borrower cannot repay the interest (and optionally also the principal). Thus, lenders traditionally consider matters such as income, savings, outgoings (such as living expenses, credit card payments, school fees etc.) employment stability and the like when configuring a mortgage or reverse mortgage product. Where such considerations suggest a risk of the borrower defaulting, then the loan application may be declined, or higher levels or security required, or higher interest payments may be levied. The present systems may not have any regard whatsoever to the risk of a borrower being unable to repay principal or interest, and instead relies on an assessment of the risk of the property not substantially increasing in value in the future. A loan product having parameters configured according to the present systems may have a provision (typically in a loan contract) reciting one or more circumstances triggering redemption of the loan. Such circumstances may include death of the property owner, cessation of the owner using the property as a principal place of residence (for example, when the owner is moved to an aged care facility, or sale of the property.

The invention is furthermore a significant departure from prior art reverse mortgage products that may result in equity erosion, where the owner may unexpectedly be left with low equity, zero equity or negative equity if interest repayments are not made. The present systems may ignore the ability of a property owner to make payments, and instead concentrate on characteristics of the property indicative of a capacity for the property to increase in value, or to at least not appreciably lose value. In this way, a fixed equity value may be ascribed to the property thereby avoiding equity erosion. It will be appreciated that the loan products that may be configured by use of the present systems are different to so-called "home safe", "fractionalisation", and "home reversion" products, which are not loans but an Open contract' of sale involving a fraction of equity in a property and provides the owner with no opportunity of reclaiming equity in the future. The present equity-based loan products that may be configured by use of the present systems are also different to so-called Popi contracts. These contracts are not loans but an option to sell a home at current price at some time in the future in return for fixed monthly payments (using home equity to deliver annuity income). Borrowers are unable to access lump sums as would normally be the case in a formal loan arrangement.

Particular advantage is provided where the interest free funds provided by the equity-based loan products configured by the present systems are used (by the property holder) to purchase a product guaranteeing a fixed income for a defined period of time (typically known as annuity products, lifetime pension, or fixed-term pension). Annuity income may provide particular advantage to elderly or retired property holders who require funds to cover basics such as food, utility bills, aged care costs/ deposits, in-home care, health, long term disability, domestic assistance and the like.

In this regard, a computer of the present system is, in some embodiments, in communication with a computer of, or associated with an annuity issuing company (Life Office). An associated computer may be a computer of a deposit institution such as a bank from which the Life Office may draw funds. Examples of Life Offices issuing annuities in Australia include Commlnsure, AMP Life and Challenger. Typically, the communication is configured so as to allow for the transfer of funds between the main system computer and Life Office or a computer of a bank from which the Life Office may draw funds. In the prior art, the funding source for an annuity is typically drawn from a lump sum superannuation payment or free capital of the annuity buyer. Currently there exists a level of resistance amongst investment advisory service providers to income annuities because the funding source (super or free capital) essentially transfers the capital from the control of investment advisers to the annuity company, thereby negatively impacting the income generation potential of the advisers. Individuals who own a home but do not have the free capital (either via their superannuation or other funds) were generally unable to purchase an income annuity before the present invention. Prior art products such as interest based debt or equity release products are not used to fund annuities because it would be counter- productive to do so. Outlaying and taking on the cost of debt to purchase a fixed contract income stream may be also considered a high risk strategy because interest rates may rise or the annuity buyer's life circumstances may change.

Even where an individual is able to otherwise fund the purchase of an annuity, the present invention provides an alternative.

Loan products configured according to the present invention may be used to fund income annuities to meet a range of other user pays services and products such as aged care RAD/DAP payments, in-homecare, long term disability, senior retraining, home safety improvements and elective surgery. The origination process of the equity release product would involve Lenders/Investors initially investing funds into a Managed Investment Fund. This would provide pro rata entitlement for Lenders/Investors to the risk evaluated growth returns of the equity release loan book. The Investment Manager or Custodian of the Fund would initiate transfer of the funds to the Life Office on behalf of a homeowner for annuity issuance and to meet income obligations to the property owner. The balance of undistributed annuity funds would be invested in the market to generate investment and income returns for the home owner subject annuity terms. A further advantage is the interest free equity funding mechanism for an income annuity product in conjunction with the investment returns and income distributed to the owner provides potential for the reclaiming of equity at the end of the annuity term.

The present systems are advantageously implemented on a computer-based platform given the many and varied considerations required to properly assess a risk associated with a given property. Any identified risk may require further alteration of base loan parameters such as minimum loan to equity ratio and the fixed equity value agreed by the product provider etc. Computers are especially capable of executing algorithms (and in some embodiments, sequential algorithms) upon such considerations are based, and also storing and implementing data (such as in look-up tables) in implementing the present invention.

Computer-based platforms are further preferred because of the ability to interface with multiple computer-based information sources providing information useful in quantifying a risk associated with a property. As used herein, the term "risk" includes the risk of a property decreasing in value, and the risk of a property not increasing in value.

As discussed more fully infra, multiple information types may be used by the system software to assess risk, and to therefore calculate the risk-adjusted valuation. For example, one useful information type is a property price index. Such indices are provided by specialist agencies (such as the United States Federal Housing Agency, and the Australian Bureau of Statistics). The computers of such agencies may be in network communication with the computer of the present systems thereby allowing for the automated and repeated importation of information relevant to the assessment of risk and ongoing valuation of the loans. Multiple network connections may be made with multiple agencies to improve the number of information types used by the system to determine risk. The information may be provided in real time to further increase the accuracy of the risk assessment.

Computer implementation is also important due to the need to transform data used to determine risk. Taking property price indices again as an example, raw prices may be analysed by the present computer to smooth seasonal variations or to remove other artefacts. Alternatively, multiple indices may be used and combined with each index being weighted according to importance, reliability or statistical significance.

The risk analysis algorithm embedded in the software of the present systems allow for the calculation of a risk-adjusted valuation. The algorithm may output a risk adjustment value, which is typically in numerical form. In one embodiment, the risk adjustment value is a multiplier which is applied to a base valuation. The multiplier may be expressed as number, a fraction or as percentage and may be positive or negative. For example, the base valuation of the property may be $600,000.00 and the risk adjustment value is +10%. In that circumstance, the risk adjusted valuation is $660,000.00. As another example, the base valuation of the property may be $600,000.00 and the risk adjustment value is 0.9. In that circumstance, the risk adjusted valuation is $540,000.00. In the former example, by assessing risk the product provider is informed of a likely increase in value of the property over the term of the loan agreement with the property owner. In such circumstances, the non- debt equity release product may be configured to assure the owner of a relatively high fixed equity value. Of course, a product configured in this way is attractive to an owner and he/she is more likely to enter into a loan agreement with the product provider.

In the latter example, the product provider is informed of a likely decrease in value in the property over the proposed loan term, and the loan product is therefore configured so as to include a lower fixed equity value. Even in this circumstance, the loan terms may be preferable for the property owner when compared with a reverse mortgage product which levies a premium interest charge to the market rate, and may result in significant equity erosion over the term of the loan. In assessing risk, the algorithms of the system software utilize information types which are useful in predicting the risk that the property subject the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time. As discussed above, a property price index may be a useful information type, especially where price trends may be established. In a simple example, where a price history for homes in geographical area shows an average price increase of 4% per year, and the loan term is agreed at 5 years (at which time the property is sold) then risk adjustment value of 20% is calculated.

It is likely that more complex considerations will be required to more fully inform the provider of the risk of any given property. For example, general economic data may inform of increased rates of unemployment for the city in which the property is located due to closure of an automotive building plant, which in turn lowers the expectation of property price increases in the next 5 years. In that case the risk adjustment value of 20% may be revised downwardly by the software algorithm to 15%. However, the property is in a price bracket that is generally not achievable by factory workers and so the algorithm revises the risk adjustment value upwardly from 15% to 18%. It will be appreciated from the foregoing that an algorithm of the software may be very complex, relying on multiple information types with each information type potentially interacting with other information types so as to form a more complete risk analysis. Another potentially useful information type relates to the location of the property; for example, state, region, city, suburb, locale, proximity to a school due for construction during the loan term, proximity to an industrial complex due for removal during the loan term etc. Another potentially useful information type relates to type of property subject the equity release product, dwelling (if any) size and/or characteristics of the property subject the equity release product, land size and/or characteristics of the property subject the equity release product. Properties having small dwellings on restricted land may tend to exhibit only modest price increases compared with those having room for expansion.

Another useful information type relates to general economic information, such as gross domestic product information, balance of trade information, consumer confidence survey information, consumer price index information, retail sales, inflation, taxation rates and the like.

Another useful information type relates to interest rate information. A prediction of increased interest rates is likely to dampen housing prices.

Another useful information type relates to wages information. A prediction in increased wages growth may cause an upward revision of the risk adjustment value.

Another useful information type relates to employment information given that increased employment opportunities tend to stimulate housing prices. Another useful information type relates to demographic information. A predicted increase in population without building of a sufficient number of new dwellings tends to increase housing demand and therefore prices.

Another useful information type relates to climate information. For example, a prediction that a low lying property might succumb to a rising sea levels due to climate change would tend to lower any expectation of a price increase, and may indicate a sharp decrease.

Another useful information type relates to town planning information. For example, where a property in a light industrial zone, and a local government authority is expected to rezone to a residential zone it would predicted that the price of the property would increase to an extent greater than would otherwise be predicted. Another useful information type relates to compulsory acquisition information. Some properties are subject to an acquisition overlay, for example where the property may be required for road widening. As traffic congestion increases over time, the prospect of the property being compulsorily acquired will increases and thereby dampen any general increases in value in the same general area.

Another useful information type relates to legal information. For example, the property may be the subject of a caveat lodged by a creditor of the owner. The caveat will affect the ability of the owner to sell at the time agreed to by the owner and the product provider.

Another useful information type relates to title information. For example, the property title may show an easement over part of the land meaning that a dwelling could not be extended over the easement. The easement may affect the ability of the property to increase in value in line with other similar properties in the area given the lowered potential for improving the existing dwelling.

Another useful information type relates to covenant information. For example, where a covenant over properties in an area prevents inappropriate development, it may be expected that greater price rises could result as compared with similar properties in an area where development is unrestricted.

The aforementioned types are provided merely as exemplary in nature. Given the benefit of the present specification, the skilled person is capable of routinely conceiving of other information types suitable in determining a risk adjustment value for use in the present invention. All such information types are included in the scope of the present invention.

The present system may be configured so as to calculate a risk-adjusted valuation. Typically, a base valuation is used as a starting point. The base valuation is generally a present valuation based on factor(s) well known to the skilled person. Factors such as location, land size, number of rooms, quality of dwelling construction, availability of off-street car parking, streetscape, proximity to public transport and other general amenity considerations are typically included in determining the base valuation. In one embodiment, the base valuation is a certified or sworn valuation provided by a third party. Alternatively, the valuation may be provided by a realtor (real estate agent), or even by the product provider.

The system software may be configured so as to receive and store the base valuation in the computer, and apply the risk adjustment value so as to provide a risk-adjusted valuation. In the present systems, the computer may comprise network interface means configured to interface with computer(s) administered by information source(s) used by the system in assessing the risk associated with the property subject of the equity release product. The network interface means typically routes data into and out of the system computer. For example, the network interface may transmit a request to an information source computer to provide information on a given property, receive the requested information and then route that information to the system computer CPU (or a memory register accessible by the CPU) to allow for quantification of a risk adjustment value.

The network interface means may furthermore interface with computer(s) administered by information source(s) used by the system in assessing the base valuation of the property subject the equity release product. The CPU then utilizes the risk adjustment value to mathematically transform the base valuation to provide a risk-adjusted value of the property. Thus, a working interaction exists between information source computers and the system computer, and furthermore there is a transformation of data carried out by the system computer CPU in order to provide a useful outcome being the risk-adjusted value.

In another aspect, there is provided by the present invention a computer-implemented method for configuring a real property equity release product, the method comprising the steps of: providing or determining a base valuation of a real property, providing or determining a risk value associated with the real property, and determining a risk-adjusted real property valuation by reference at least in part to the base valuation and the risk value. The methods and systems described herein may be deployed in part or in whole through a computer that executes computer software, program codes, and/or instructions on a processor. The processor may be part of a server, client, network infrastructure, mobile computing platform, stationary computing platform, or other computing platform. A processor may be any kind of computational or processing device capable of executing program instructions, codes, binary instructions and the like. The processor may be or may include a signal processor, digital processor, embedded processor, microprocessor or any variant such as a coprocessor (math co-processor, graphic co-processor, communication co-processor and the like) and the like that may directly or indirectly facilitate execution of program code or program instructions stored thereon. In addition, the processor may enable execution of multiple programs, threads, and codes. The threads may be executed simultaneously to enhance the performance of the processor and to facilitate simultaneous operations of the application. By way of implementation, methods, program codes, program instructions and the like described herein may be implemented in one or more thread. The thread may spawn other threads that may have assigned priorities associated with them; the processor may execute these threads based on priority or any other order based on instructions provided in the program code. The processor may include memory that stores methods, codes, instructions and programs as described herein and elsewhere. The processor may access a storage medium through an interface that may store methods, codes, and instructions as described herein and elsewhere. The storage medium associated with the processor for storing methods, programs, codes, program instructions or other type of instructions capable of being executed by the computing or processing device may include but may not be limited to one or more of a CD-ROM, DVD, memory, hard disk, flash drive, RAM, ROM, cache and the like.

A processor may include one or more cores that may enhance speed and performance of a multiprocessor. In embodiments, the process may be a dual core processor, quad core processors, other chip-level multiprocessor and the like that combine two or more independent cores (called a die).

The methods and systems described herein may be deployed in part or in whole through a computer that executes computer software on a server, client, firewall, gateway, hub, router, or other such computer and/or networking hardware. The software program may be associated with a server that may include a file server, print server, domain server, internet server, intranet server and other variants such as secondary server, host server, distributed server and the like. The server may include one or more of memories, processors, computer readable media, storage media, ports (physical and virtual), communication devices, and interfaces capable of accessing other servers, clients, computers, and devices through a wired or a wireless medium, and the like. The methods, programs or codes as described herein and elsewhere may be executed by the server. In addition, other devices required for execution of methods as described in this application may be considered as a part of the infrastructure associated with the server. The server may provide an interface to other devices including, without limitation, clients, other servers, printers, database servers, print servers, file servers, communication servers, distributed servers and the like. Additionally, this coupling and/or connection may facilitate remote execution of program across the network. The networking of some or all of these devices may facilitate parallel processing of a program or method at one or more location without deviating from the scope of the invention. In addition, any of the devices attached to the server through an interface may include at least one storage medium capable of storing methods, programs, code and/or instructions. A central repository may provide program instructions to be executed on different devices. In this implementation, the remote repository may act as a storage medium for program code, instructions, and programs.

The software program may be associated with a client that may include a file client, print client, domain client, internet client, intranet client and other variants such as secondary client, host client, distributed client and the like. The client may include one or more of memories, processors, computer readable media, storage media, ports (physical and virtual), communication devices, and interfaces capable of accessing other clients, servers, computers, and devices through a wired or a wireless medium, and the like. The methods, programs or codes as described herein and elsewhere may be executed by the client. In addition, other devices required for execution of methods as described in this application may be considered as a part of the infrastructure associated with the client.

The client may provide an interface to other devices including, without limitation, servers, other clients, printers, database servers, print servers, file servers, communication servers, distributed servers and the like. Additionally, this coupling and/or connection may facilitate remote execution of program across the network. The networking of some or all of these devices may facilitate parallel processing of a program or method at one or more location without deviating from the scope of the invention. In addition, any of the devices attached to the client through an interface may include at least one storage medium capable of storing methods, programs, applications, code and/or instructions. A central repository may provide program instructions to be executed on different devices. In this implementation, the remote repository may act as a storage medium for program code, instructions, and programs. The methods and systems described herein may be deployed in part or in whole through network infrastructures. The network infrastructure may include elements such as computing devices, servers, routers, hubs, firewalls, clients, personal computers, communication devices, routing devices and other active and passive devices, modules and/or components as known in the art. The computing and/or non-computing device(s) associated with the network infrastructure may include, apart from other components, a storage medium such as flash memory, buffer, stack, RAM, ROM and the like. The processes, methods, program codes, instructions described herein and elsewhere may be executed by one or more of the network infrastructural elements.

The methods, program codes, and instructions described herein and elsewhere may be implemented on a cellular network having multiple cells. The cellular network may either be frequency division multiple access (FDMA) network or code division multiple access (CDMA) network. The cellular network may include mobile devices, cell sites, base stations, repeaters, antennas, towers, and the like. The cell network may be a GSM, GPRS, 3G, EVDO, mesh, or other networks types.

The methods, programs codes, and instructions described herein and elsewhere may be implemented on or through mobile devices. The mobile devices may include navigation devices, cell phones, mobile phones, mobile personal digital assistants, laptops, palmtops, netbooks, pagers, electronic books readers, music players and the like. These devices may include, apart from other components, a storage medium such as a flash memory, buffer, RAM, ROM and one or more computing devices. The computing devices associated with mobile devices may be enabled to execute program codes, methods, and instructions stored thereon. Alternatively, the mobile devices may be configured to execute instructions in collaboration with other devices. The mobile devices may communicate with base stations interfaced with servers and configured to execute program codes. The mobile devices may communicate on a peer to peer network, mesh network, or other communications network. The program code may be stored on the storage medium associated with the server and executed by a computing device embedded within the server. The base station may include a computing device and a storage medium. The storage device may store program codes and instructions executed by the computing devices associated with the base station.

The computer software, program codes, and/or instructions may be stored and/or accessed on computer readable media that may include: computer components, devices, and recording media that retain digital data used for computing for some interval of time; semiconductor storage known as random access memory (RAM); mass storage typically for more permanent storage, such as optical discs, forms of magnetic storage like hard disks, tapes, drums, cards and other types; processor registers, cache memory, volatile memory, non-volatile memory; optical storage such as CD, DVD; removable media such as flash memory (e.g. USB sticks or keys), floppy disks, magnetic tape, paper tape, punch cards, standalone RAM disks. Zip drives, removable mass storage, off-line, and the like; other computer memory such as dynamic memory, static memory, read/write storage, mutable storage, read only, random access, sequential access, location addressable, file addressable, content addressable, network attached storage, storage area network, bar codes, magnetic ink, and the like. The methods and systems described herein may transform physical and/or or intangible items from one state to another. The methods and systems described herein may also transform data representing physical and/or intangible items from one state to another.

The elements described and depicted herein, including in flow charts and block diagrams throughout the figures, imply logical boundaries between the elements. However, according to software or hardware engineering practices, the depicted elements and the functions thereof may be implemented on computers through computer executable media having a processor capable of executing program instructions stored thereon as a monolithic software structure, as standalone software modules, or as modules that employ external routines, code, services, and so forth, or any combination of these, and all such implementations may be within the scope of the present disclosure. Examples of such computers may include, but may not be limited to, personal digital assistants, laptops, personal computers, mobile phones, other handheld computing devices, wired or wireless communication devices, transducers, chips, calculators, satellites, tablet PCs, electronic books, gadgets, electronic devices, devices having artificial intelligence, computing devices, networking equipment, servers, routers and the like.

Furthermore, the elements depicted in the flow chart and block diagrams or any other logical component may be implemented on a machine capable of executing program instructions. Thus, while the foregoing drawings and descriptions set forth functional aspects of the disclosed systems, no particular arrangement of software for implementing these functional aspects should be inferred from these descriptions unless explicitly stated or otherwise clear from the context. Similarly, it will be appreciated that the various steps identified and described above may be varied, and that the order of steps may be adapted to particular applications of the techniques disclosed herein. All such variations and modifications are intended to fall within the scope of this disclosure. As such, the depiction and/or description of an order for various steps should not be understood to require a particular order of execution for those steps, unless required by a particular application, or explicitly stated or otherwise clear from the context.

The methods and/or processes described above, and steps thereof, may be realized in hardware, software or any combination of hardware and software suitable for a particular application. The hardware may include a general purpose computer and/or dedicated computing device or specific computing device or particular aspect or component of a specific computing device. The processes may be realized in one or more microprocessors, microcontrollers, embedded microcontrollers, programmable digital signal processors or other programmable device, along with internal and/or external memory. The processes may also, or instead, be embodied in an application specific integrated circuit, a programmable gate array, programmable array logic, or any other device or combination of devices that may be configured to process electronic signals. It will further be appreciated that one or more of the processes may be realized as a computer executable code capable of being executed on a computer readable medium.

The computer executable code may be created using a structured programming language such as C, an object oriented programming language such as C++, or any other high-level or low-level programming language (including assembly languages, hardware description languages, and database programming languages and technologies) that may be stored, compiled or interpreted to run on one of the above devices, as well as heterogeneous combinations of processors, processor architectures, or combinations of different hardware and software, or any other machine capable of executing program instructions. Thus, in one aspect, each method described above and combinations thereof may be embodied in computer executable code that, when executing on one or more computing devices, performs the steps thereof. In another aspect, the methods may be embodied in systems that perform the steps thereof, and may be distributed across devices in a number of ways, or all of the functionality may be integrated into a dedicated, standalone device or other hardware. In another aspect, the means for performing the steps associated with the processes described above may include any of the hardware and/or software described above. All such permutations and combinations are intended to fall within the scope of the present disclosure. Hardware-based protection will utilise a physical device, commonly known as a dongle, USB hardware key or security key. Implementation involves the integration of the dongle's firmware with the central system computer programmed with the software. The software in the central system computer will only run if the dongle is physically present on the computer or machine. Additionally, the dongle will control how the end-user actually uses the software subject to software licensing arrangements. Whether it's time or usage-based restrictions or limiting the modules and features available, the end-user's access will always be managed and enforced by the dongle. While the invention has been disclosed in connection with the preferred embodiments shown and described in detail, various modifications and improvements thereon will become readily apparent to those skilled in the art.

Accordingly, the spirit and scope of the present invention is not to be limited by the foregoing examples, but is to be understood in the broadest sense allowable by law.

The present invention will now be more fully described by reference to the following non- limiting preferred embodiment.

DETAILED DESCRIPTION OF A PREFERRED EMBODIMENT OF THE INVENTION In this preferred embodiment, there is provided a system comprising computer software having a set of algorithmic based metrics that produce specific output. The algorithmic output allows for the configuration of a loan product based on equity release from a real property. The metrics in the equity release product may be configured to produce different outcomes and loan types for a variety of purposes.

Reference is made to FIG.1 which shows a preferred computer network, having a central system computer 10 administered by a managed investment structure. Networked to the central computer 10 are computers 12, 14, 16 and 18 each administered by various third party information providers. Network connections are provided by network interfaces 20, with information transmitted as per the arrows. Computer 12 is administered by a property valuation business and transmits a sworn valuation to central computer 10. Computer 14 is administered by a Life Office (annuity issuer), loan processor, financial organisation, or agent and transmits (and receives) details of the loan, loan amount, LVR and other loan or security related details to central computer 10. Computer 16 is administered by a property data aggregator and transmits property data and information, historical or otherwise related to the risk evaluation process of the loan transaction to central computer 10. Computer 18 is administered by a company providing housing price index information and transmits a real time house price index to central computer 10. It will be understood that the central computer 10 operates to process a plurality of properties, each of which is owned by an individual seeking approval for an equity release loan. Thus, information transmitted by computers 12, 14, 16 and 18 alters according to the property subject of the equity release loan application. The central computer 10 comprises system data tables and software having system functions, metrics and algorithms capable of utilizing the outputs of computers 12, 14, 16 and 18 to provide a risk adjusted property valuation. Other outputs of central computer 10 include loan terms (such as term of loan and any other conditions), and an electronically generated equity release contract. The central computer 10 resides in a Managed Investment Structure that owns title and manages the equity release loan book on behalf of the Lender and/or Investors.

Typically, the central computer requests a sworn valuation from computer 12. The valuation has been determined by a qualified valuation officer who has previously visited the property and entered the valuation into a database held by computer 12.

Where the risk adjusted valuation is significantly higher than the present sworn valuation an algorithm defines the loan application as an acceptable risk. Where loan funds are used to pay the owner an annuity, sequential algorithms in the computer 10 (or in some embodiments a different computer i.e. Life Office) calculate the value of payments providing a fixed income stream and investment return for the home owner and the returns on investment for the Managed Investment Structure investors (combination of risk premium returns and market growth).

Referring to FIG. 2 there is shown an embodiment whereby the information from the information sources is routed to the central computer 10 both directly and via an intermediate computer 20. The role of the intermediate computer 20 is to provide a second, stored version of the information that may be used to cross-check the information routed directly to the computer 10. This arrangement provides a stored record of the information (and separate to the information received by the computer 10) that can be used to validate the information used in computer 10 to make any of the calculations required to configure a loan product. For example, after configuration of a loan product the system software may retrieve the stored version of the information to check for strict concordance.

Referring to FIG. 3 there is shown an embodiment whereby the information from the information sources is routed to the central computer via an intermediate computer 22 only. The role of the intermediate computer 22 is to collate information in a database form. The information may be ordered, filtered, or transformed for example by way of software of the intermediate computer 22. When required by the system computer 10, information is retrieved from the intermediate computer 22 for use in the various calculations required. Referring now to FIG. 4 there is shown an embodiment utilizing look-up tables 100, 200, 300, 400, 500 in storage 600 on the system computer 700. In addition, a property valuation computer 800 is in network connection with the system computer 700 to provide at least some of the information needed. Numerical information extracted from the look-up table 100, and also numerical information transmitted by the property valuation computer 800 is processed by the central processing unit 900 of the system computer 700.

The property subject the equity release product is in the suburb of Sunnyvale and so look-up table 100 is utilized. The table 100 shows that average gain per year in property price is +3% with this being added to the risk value. There is a new school due for completion near the subject property in the next +2 years, and so the adjustment of 1 % to reflect an increase in amenity is added. There is no amenity decrease forecast for the area near the property. The city in which Sunnyvale exists has an unemployment rate of 7%, which adds a -7% adjustment factor to reflect the possibility of slower property growth than that seen historically. Finally, the dwelling is brick and so +2% adjustment factor is added given the greater likelihood that the structure will retain its appearance and structural integrity in the future. The addition of adjustment factors are added by the central processing unit 900 to result in the risk value.

To obtain the risk-adjusted valuation, a base valuation is requested by the system computer 700 from the property valuation computer. To this base value, the risk value is applied so as to provide the risk-adjusted equity value for the property subject the equity release loan. This value remains fixed throughout the loan contract period.

Reference is made to FIG 6, a schematic showing how once the risk adjusted equity value is established, it remains fixed throughout the loan contract period, eliminating any potential for equity erosion.

To effect the above, the system software directs selection of look-up table 100, addition of adjustment factors, retrieval of base valuation from property valuation computer 800, and calculation of risk-adjusted property value.

It will be understood that embodiments of the system utilizing look up tables may be devoid of any network connect. A single computer may be utilized with the information from the information sources being collated on another computer, the collated information being stored on a storage medium, and the storage medium connected to the single computer which then imports the collated information. Considering the system of Figure 4, the property valuation computer may be removed, and the property value manually inputted into the single computer. Referring to FIG. 5 there is shown a system including a bank computer 24 from which an annuity issuing company may draw funds. The arrow between the central computer 10 and bank computer 24 illustrates the electronic transfer of funds obtained by way of a loan product configured by the computer 10. Alternatively, the computer 10 may instruct a further computer to effect the electronic funds transfer to computer 24.

The system may be configured so as to provide any one or more of the following specific outcomes: fixed equity retention value, deferred risk evaluated return amortised out over the loan period, no default provision, rollover provision (for older property owners > 60 years), no impact on cash flow, savings and incomes of property owner, downside risk protection for lenders/investors, Lender indemnity to negative growth over the contract period, a hybrid (low interest/equity to growth) loan construct (adapted for potential use by retail banks) in conjunction with a risk adjusted fixed equity value eliminating equity erosion in contract for property owners, strong residential mortgage backed returns on investment for lenders modelled to outperform official (such as provided by the Australian Bureau of Statistics) annualised gross house price growth significantly. It will be appreciated that all embodiments of the invention are not necessarily capable of achieving one of, some of, most of, or all of any of the practical advantages described herein.

An outcome of the present systems and methods may be an equity release product. The product may be information stored in computer readable medium (such as information relating to a risk-adjusted property valuation, product terms and conditions, scheduling of payments to the property owner, scheduling of payments to the product provider, details of any security held etc). Information on the product may be produced in hard copy form for review and execution by the product provider and/or the property owner, including a physical contract reciting any of the information.

The equity release product may comprise algorithmic based metrics and functions configured to deliver specific outcomes that meet the capital and investment requirements of lenders, investors and property owners.

Claims

CLAIMS:

1 . A system for configuring a real property equity release product, the system comprising:

a computer, and

computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product .

2 The system of claim 1 wherein in providing the risk-adjusted valuation of the property, the software utilizes one or more information types useful in quantifying a risk related to the property.

3. The system of claim 2 wherein the one or more information types is/are obtained from one or more information sources in direct or indirect communication with the computer.

4. The system of claim 3 wherein the one or more information sources are controlled by a party or parties different to the party or parties controlling the computer.

5. The system of any one of claims 2 to 4 wherein the one or more information types useful in quantifying a risk related to a real property is information useful in determining a risk that the property subject the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time.

6. The system of any one of claims 2 to 5 wherein the one or more information types is relevant or potentially relevant in predicting future value of the property subject the equity release product.

7. The system of claim 6 wherein the information type(s) is/are selected from the group consisting of: a property price index, property price indices over a period, location of property subject the equity release product, type of property subject the equity release product, dwelling (if any) size and/or characteristics of the property subject the equity release product, land size and/or characteristics of the property subject the equity release product, economic information, interest rate information, wages information, employment information, demographic information, climate information, regulatory information, town planning information, compulsory acquisition information, legal information, title information, and covenant information.

8. The system of any one of claims 2 to 7 comprising the use of at least 2, 3, 4, 5, 6, 7,

8. 9 or 10 information types to provide the risk-adjusted valuation

9. The system of any one of claims 2 to 8 wherein the information sources are controlled by at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 different parties.

10. The system of any one of claims 1 to 9 wherein the software is configured to determine a risk-adjusted valuation be reference to (i) a base valuation and (ii) the one or more information types useful in quantifying a risk related to the property.

1 1 . The system of claim 10 when appended to any one of claims 3 to 8 wherein the base valuation is determined at least in part by reference to information communicated to the computer from one or more information sources.

12. The system of any one of claims 1 to 1 1 wherein the software is configured to determine a risk value from the information useful in quantifying a risk related to a real property, and then using the risk value to provide the risk-adjusted valuation.

13. The system of any one of claims 3 to 12 comprising a data validation computer and/or an information collation computer in direct or indirect communication with the computer having computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product, the data validation computer and/or information collation computer being in direct or indirect communication with the one or more information sources.

14. The system of any one of claims 1 to 13 comprising a computer of, or associated with, an annuity originating company in direct or indirect communication with the computer having computer-executable software configured to provide a risk-adjusted valuation of the property subject of the real property equity release product.

15. A computer-implemented method for configuring a real property equity release product, the method comprising the steps of: providing or determining a base valuation of a real property,

providing or determining a risk value associated with the real property, and determining a risk-adjusted real property valuation by reference at least in part to the base valuation and the risk value.

16. The method of claim 15 wherein risk value is provided by, or determined by reference at least in part to one or more information types useful in quantifying a risk related to a real property.

17. The method of claim 16 wherein the one or more information types useful in quantifying a risk related to a real property is information useful in determining a risk that the property subject the equity release product (i) fails to achieve a predetermined increase in value over time or (ii) decreases in value over time.

18. The method of claim 16 or claim 17 wherein the one or more information types is relevant or potentially relevant in predicting future value of the property subject the equity release product.

19. The method of claim 18 wherein the information type(s) is/are selected from the group consisting of: a property price index, property price indices over a period, location of property subject the equity release product, type of property subject the equity release product, dwelling (if any) size and/or characteristics of the property subject the equity release product, land size and/or characteristics of the property subject the equity release product, economic information, interest rate information, wages information, employment information, demographic information, climate information, regulatory information, town planning information, compulsory acquisition information, legal information, title information, and covenant information.

20. The method of claim 18 or claim 19 wherein the information types useful in quantifying a risk related to a real property are obtained from at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 information sources.

21 . The method of claim 20 wherein the information sources are controlled by at least 2, 3, 4, 5, 6, 7, 8, 9 or 10 different parties.

22. Computer-executable software configured to execute the method of any one of claims 15 to 21 .