Note : Les descriptions sont présentées dans la langue officielle dans laquelle elles ont été soumises.
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METHODS AND SYSTEMS FOR FINANCING EXPENSES WITH A
LOAN SECURED BY REAL PROPERTY
CROSS-REFERENCES TO RELATED APPLICATIONS
[0001] This application claims priority to each of the following U.S. Patent
Applications: U.S. Pat. Appl. No. 11/039,367, entitled "METHODS AND SYSTEMS
FOR
FINANCING EXPENSES WITH A LOAN SECURED BY REAL PROPERTY," filed
January 18, 2005 by John J. Pembroke; U.S. Pat. Appl. No. 11/039,387, entitled
"METHODS
AND SYSTEMS FOR FINANCING HEALTHCARE EXPENSES WITH A LOAN
SECURED BY REAL PROPERTY," filed January 18, 2005 by John J. Pembroke; U.S.
Pat.
Appl. No. 11/077,990, entitled "METHODS AND SYSTEMS FOR FINANCING FOOD
EXPENSES WITH A LOAN SECURED BY REAL PROPERTY," filed March 11, 2005 by
John J. Pembroke; U.S. Prov. Pat. Appl. No. 60/704,177, entitled "COORDINATION
OF
ACCESS TO HEALTHCARE PROVIDERS," filed July 28, 2005 by John J. Pembroke; and
U.S. Prov. Pat. Appl. No. 60/701,735, entitled "NETWORK SECURITIZATION," filed
July
22, 2005 by John J. Pembroke.
BACKGROUND OF THE INVENTION
[0002] This application relates generally to real-property mortgages. More
specifically, this application relates to methods and systems for financing
food expenses with
a loan secured by real property.
[0003] Typical property owners have a number of expenses. A common ordering of
their living costs for property owners in order of expense is: their home
mortgage payment,
food, healthcare, energy, and telecommunications. Of these five principal
expenses, only the
mortgage payment provides financing over an extended period of time. The other
expenses
are paid as they are incurred and may be subject to substantial variations as
a result of
external impacts, such as when world events affect the availability, and
therefore the cost, of
energy sources. Cost spikes in certain sectors force many homeowners with
tight budgets
into circumstances where they need to decide which of their principal expenses
to meet, and
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which to default on. In many instances, this may result in mortgage-loan
defaults, an
occurrence disadvantageous both to the property owner and to the lender.
[0004] For example, it is commonly known that medical and healthcare expenses
are
increasing rapidly. Currently, the average premium for a family medical
insurance policy in
the United States is $9086/year. The average annual out-of-pocket expenses for
healthcare in
the United States is $2664. Medicare managed-care plans will pay an estimated
$1964 in
average annual out-of-pocket expenses. On average, seniors spend about $2300
per year on
medicines and drugs. While these costs are already high, they are also
increasing at rates that
generally exceed average inflation rates, making their impact even more
significant.
Furthermore, the impact of these costs may sometimes take the form of a sudden
unexpected
cost that arises as a result of an unanticipated illness or accident.
[0005] It is also commonly known that food expenses already form a significant
portion of fainily budgets and are continuing to increase. Currently, the
average cost for food
for a family is approximately $4300/year, with about $2700 of that spent on
food consumed
at home and $1600 of that spent on food consumed away from home. Expenses for
food
amount to about 12% of the typical family budget. In many instances, the high
cost of food
affects the quality of food that people consume as they seek ways to lower the
cost of food so
that they may meet other expenses.
[0006] There is, thus, a general need in the art for methods and systems that
mitigate
the effect of these costs.
BRIEF SUMMARY OF THE INVENTION
[0007] Embodiments of the invention provide methods and systems for providing
a
loan to a borrower. In a first set of embodiments, an identification of real
property and a
specification of a monetary amount to be used for future payment of expenses
is received. A
total loan value for the real property and the specified monetary amount is
calculated.
Approval of the loan secured by the real property for the total loan value is
requested. A
closing is initiated on the loan at which a customer depository account is
funded with the
specified monetary amount to provide future funds for payment of expenses
incurred by the
borrower.
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[0008] In some such embodiments, a set of limitations is received defining
expenses
that qualify for payment with funds in the customer depository account.
Restrictions on
witlidrawal of funds from the customer depository account are initiated in
accordance with
the limitations. For example, the set of limitations may define one or more
specific
merchants at which goods and/or services must be purchased to qualify for
payment with
funds in the customer depository account.
[0009] In some instances, issuance of a debit instrument to the customer may
be
initiated. The debit instrument may be used at a point of sale to debit the
customer depository
account as part of a debit transaction for payment of the expenses. Merely by
way of
example, the debit instrument may comprise a magnetic-stripe card or may
comprise a smart
card.
[0010] Some embodiments may additionally accommodate additional specification
of
products and/or services distinct from the monetary amount to be used for
future payment of
expenses. Calculation of the total loan value comprises calculating the total
loan value for
the real property, the specified monetary amount, and the additional products
and/or services.
The customer depository account is funded with the specified monetary amount
and a
supplementary monetary amount for payment of expenses for the additional
products and/or
services. In one such embodiment, the customer depository account comprises a
plurality of
customer depository accounts, each of which is identified with a distinct
subset of the
products and/or services and the monetary amount to be used for fu.ture
payment of expenses;
a transfer of funds may be effected among at least some of the plurality of
customer
depository accounts. In another such embodiment, the customer depository
account is
segregated for separate tracking of funds identified with distinct subsets of
the products
and/or services and the monetary amount to be used for future payment of
expenses; an
identification of the funds among the distinct subsets may be changed.
[0011] In some embodiments, the loan may also be secured by the specified
products
and/or services. Approval of the loan may comprise initiating an appraisal of
the value of the
property with the specified products and/or services and calculating a back-
end ratio that
omits consideration of separate payment of the expenses by the borrower. The
funds in the
customer depository account may be designated as a prepaid asset linked with
the real
property, whereby the funds in the customer deposit account comprise a real-
property
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interest. In one embodiment, the specification of products and/or services
comprises a
specification of a term for the products and/or services.
[0012] The loan may be any number of different types of loans secured by real
property in different embodiments. For example, in one embodiment, the loan
comprises a
mortgage, and the borrower is a buyer of the real property. In another
embodiment, the loan
comprises a refinance mortgage and the borrower is an owner of the real
property. In a
further embodiment, the loan comprises a home-equity loan or a home-equity
line of credit
and the borrower is an owner of the real property.
[0013] At least some of the expenses may comprise recurring expenses, with
payment
of the recurring expenses being initiated when due. In some instances, at
least some of the
expenses comprise periodic expenses; in such instances, the method may further
comprise
periodically initiating payment of the periodic expenses. In some cases,
foreclosure may be
initiated against the real property and against the customer depository
account in response to
a default by the borrower on terms of the loan. Foreclosed funds in the
customer depository
account may be directed to be paid to the lender or supplier of the products
and/or services.
Embodiments of the invention may permit a value of the customer depository
account to be
increased by depositing additional funds by the borrower or a third party
after closing into the
customer depository account; this has the effect of extending a useable term
of the customer
depository account for payment of the expenses. The customer depository
account may
comprise a plurality of customer depository account, each being identified
with a distinct
subset of the specified products and/or services. A transfer of funds may thus
be effected
among at least some of the plurality of customer depository accounts. In other
instances, the
customer depository account may be segregated for separate tracking of funds
identified with
distinct subsets of the specified products and/or services. This permits an
identification of the
funds among the distinct subsets to be changed.
[0014] In a second set of embodiments, an identification of real property and
a
specification of products and/or services providing expenses is received. A
total loan value
for the real property and specified products and/or services is calculated.
Approval of the
loan secured by the real property for the total loan value is requested. A
closing on the loan
is initiated at which a customer depository account is funded to provide
future funds for
payment of the expenses. Issuance of a debit instrument to the customer is
initiated, with the
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debit instrument usable at a point of sale to debit the customer depository
account for
payment of the expenses.
[0015] In some embodiments, the loan may also be secured by the specified
products
and/or services. In one embodiment, an appraisal of the value of the property
with the
specified products and/or services is initiated, and a back-end ratio that
omits consideration of
separate payment of the expenses by the borrower is calculated. Funds in the
customer
depository account may be designated as a prepaid asset linked with the real
property,
whereby the funds in the customer depository account comprise a real-property
interest. In
some embodiments, foreclosure against the real property and against the
customer depository
account may be initiated in response to a default by the borrower on terms of
the loan.
[0016] In other embodiments, payment of a guarantee amount defined by a
remaining
value of the products and/or services may be initiated to a lender of the
total loan value in
response to a default by the borrower on terms of the loan. Alternatively, a
transfer of
ownership of the real property and a transfer of obligations under the loan
may be initiated to
a guarantor in response to a default by the borrower on terms of the loan. In
some instances,
a transfer of the customer depository account to a new buyer of the real
property may be
initiated. In other instances, a transfer of the customer depository account
to a new property
purchased by a current owner of the real property may be initiated after a
sale of the real
property. Provision may be included for increasing a value of the customer
depository
account by depositing additional funds after closing into the customer
depository account,
thereby extending a useable term of the customer depository account for
payment of the
expenses.
[0017] The customer depository account may comprise a plurality of customer
depository accounts, each of which is identified with a distinct subset of the
products and/or
services, so that a transfer of funds among at least some of the plurality of
customer
depository accounts may be effected. Alternatively, the customer depository
account may be
segregated for separate tracking of funds identified with distinct subsets of
the products
and/or services, so that an identification of the funds among the distinct
subsets may be
changed.
[0018] In a third set of embodiments, an identification of real property and a
specification of medical and/or healthcare services is received. A total loan
value for the real
property and specified medical and/or healthcare services is calculated.
Approval of the loan
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secured by the real property for the total loan value is requested. A closing
on the loan at
which a customer depository account is funded to provide future funds for
payment of
expenses for the medical and/or healthcare services is initiated. Issuance of
a debit
instrument to the customer is initiated and may be used to debit the customer
depository
account for payment of the medical and/or healthcare expenses.
[0019] In a fourth set of embodiments, methods and systems are provided for
coordinating an electronic healthcare application request between a healthcare
purchaser and
at least one of a plurality of healthcare providers. Selection criteria are
received from the
plurality of healthcare providers. Personal information is received from the
healthcare
purchaser at a coordination system over a public network. The personal
information is
filtered to identify the at least one of the plurality of healthcare
providers. Each of the at least
one of the healthcare providers has selection criteria consistent with the
personal information.
The personal information is transmitted over the public network to a computer
system
operated for the at least one of the plurality of healthcare providers.
[0020] In some instances, the personal information comprises health
information.
[0021] In one embodiment, the personal information is transmitted over the
public
network to an actuary system. An actuarial score is received from the
actuarial system. The
personal information is filtered to ensure that the actuarial score is
consistent with the
selection criteria of the at least one of the healthcare providers. Proposed
terms for a
relationship with the healthcare purchaser may be received from the at least
one of the
plurality of healthcare providers. A display may be generated for the
healthcare purchaser to
evaluate the proposed terms. In some instances, a modification of the proposed
terms may be
received for the relationship based on additional information.
[0022] In certain embodiments, these methods are used in combination with a
mechanism for financing healthcare expenses using a loan secured by real
property. An
identification of real property financed by the healthcare purchaser is
received. A total loan
value for the real property and specified healthcare costs is calculated, and
a loan secured by
the real property for the total value is initiated.
[0023] Also, in some embodiments a debit instrument may be issued to the
healthcare
purchaser. The debit instrument may be used at the at least one of the
plurality of healthcare
providers as part of a debit transaction for payment of healthcare products
and/or services.
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[0024] In a fifth set of embodiments, methods and system are provided of
securitizing
a networlc to a group of homes. In a first set of embodiments, an
identification of real
property for one of the homes is received. A total loan value is calculated
for the real
property that includes a network access charge representing a unit cost for
establishing a
network connection from the real property to a network operations center to
access
telecommunications services and includes an activation cost for activating the
network
connection. A loan secured by the real property for the total loan value is
initiated.
[0025] In some such embodiments, issuauce of an investment coupon is initiated
to an
investor to generate funds to finance costs for establishing the network. The
investment
coupon may include an undivided interest in the network and may be issued
according to a
first-in-first-out formula. The investment coupon may be issued for a cost
approximately
equal to the unit cost. Redemption of the investment coupon may also be
initiated, such as in
response to closing the loan.
[0026] In some instances, the unit cost comprises a cost for establishing a
network
connection from the real property to a local distribution center and a cost
for establishing a
network connection from the local distribution center to the network
operations center. The
telecommunications services may comprise voice, video, data, and home-security
services.
[0027] Different types of networks may be securitized in different embodiments
of
the invention. For example, in some embodiments, the network comprises a fiber
network
and the network connection comprises a fiber network connection, while in
other
embodiments, the network conlprises a high-speed wireless network and the
network
connection comprises a high-speed wireless connection.
[0028] In a second set of embodiments, issuance of a plurality of investment
coupons
is initiated to investors to generate funds to finance costs for establishing
the network. Each
of the investment coupons includes an undivided interest in the network.
[0029] The investment coupons maybe issued according to a first-in-first-out
formula. Redemption of at least one of the investment coupons may also be
initiated, such as
in response to closing a loan for purchase of one of the homes.
[0030] These embodiments may also accommodate different types of networks,
with
the network comprising a fiber network in some embodiments and comprising a
high-speed
wireless connection in other embodiments.
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[0031] The methods of the present invention may be embodied in a computer-
readable storage medium having a computer-readable progranl embodied therein
for directing
operation of a computer system. Such a computer system may include a
communications
system, a processor, and a storage device. The computer-readable program
includes
instructions for operating the computer system to provide a loan to a borrower
in accordance
with the embodiments described above.
BRIEF DESCRIPTION OF THE DRAWINGS
[0032] A further understanding of the nature and advantages of the present
invention
may be realized by reference to the remaining portions of the specification
and the drawings
wherein like reference numerals are used throughout the several drawings to
refer to similar
components.
[0033] Fig. 1 provides a schematic illustration of a functional environment in
which a
bundling company operates in accordance with embodiments of the invention;
[0034] Fig. 2 is a flow diagram illustrating a method for financing expenses
with a
loan secured by real property in a first embodiment;
[0035] Figs. 3 and 4 are flow diagrams illustrating methods for financing
expenses
with a loan secured by real property in otlzer embodiments of the invention;
[0036] Fig. 5 is a flow diagram illustrating a method for obtaining an
appraisal in
concert with the methods of Figs. 2- 4 in some embodiments;
[0037] Fig. 6 is a flow diagram illustrating the effect of default on a loan
that finances
expenses in accordance with embodiments of the invention;
[0038] Fig. 7 is a flow diagram illustrating the use of a debit instrument to
purchase
goods and/or services with funds from an account secured by real property;
[0039] Fig. 8 is a schematic block diagram illustrating the structure of a
computer
system on which methods of the invention may be embodied;
[0040] Fig. 9 is a schematic illustration of a structure that may permit
embodiments of
the invention to coordinate access to healthcare providers;
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[0041] Fig. 10 is a flow diagram illustrating performing validation checks as
part of
the methods of the invention;
[0042] Fig. 11 is a flow diagram illustrating obtaining an actuarial score as
part of the
methods of the invention;
[0043] Fig. 12 illustrates how criteria may be matched with purchaser data to
identify
suitable healthcare providers;
[0044] Fig. 13 is a flow diagram illustrating how information may be filtered
and
transferred to healthcare providers in some embodiments of the invention;
[0045] Fig. 14 is a schenlatic diagram of a structure that may be used for
deployment
of telecommunications over a fiber-optic network in some embodiments; and
[0046] Fig. 15 is a flow diagram illustrating a method for financing fiber-
optic costs
in an embodiment.
DETAILED DESCRIPTION OF THE INVENTION
1. Expense Financing
[0047] Embodiments of the invention increase consumer buying power and
insulate
consumers from dramatic price fluctuations by providing a loan secured by real
property that
may be used to finance certain products and services. In some instances,
security for the loan
may be provided by the real property and some other property, such as by a
cash value of
specified products and services in one embodiment. Some of the products and
services that
may be financed provide "recurring expenses," which is used herein to refer to
expenses that
occur more than once and are not satisfied by single payments. In some
instances, the
recurring expenses include "periodic expenses," which are expenses that arise
on a regular
repeatable basis, such as payments that are to be made every month, every
quarter, every
year, or on some other periodic timetable. Other products and services that
may be financed
provide "fixed expenses," which are one-time expenses paid to a supplier.
[0048] Examples of products and services that give rise to recurring expenses
include
the following, which may be categorized broadly as encompassing "voice"
products and
services, "video" products and services, "data" products and services, "audio"
products and
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services, "communications" products and services, "utility" products and
services, "security"
products and services, "healthcare" products and services, "insurance"
products and services,
and "savings" products and services, among others. For instance, voice
products and services
may include telephone service, mobile-telephone service, voice-over-IP
("VoIP") service,
and the like. Video products and services may include television rentals,
video-on-demand
service, video-gaming service, video conferencing service, and the like. Data
products and
services may include broadband, dial-up Internet access, text messaging, and
the like. Audio
products and services may include music-on-demand services and the like.
Cominunications
products and services may include structured wire, optical fiber, wireless,
wireline (including
cable, coax, etc.), Ethernet, and satellite services, among others. Utility
products and services
may include energy products such as natural gas and electricity, water
service, waste-disposal
service, and the like. Security products and services may include home-
security services,
monitoring services, and the like. Home products and services may include
homeowner
association dues, lawn care, special assessments, and the like. Healthcare
products and
services may include healthcare programs, physician and hospital services,
long-term care
assistance programs, meal-delivery services, and the like. Insurance products
and services
may include home insurance, automobile insurance, umbrella insurance, and the
like. Merely
by way of example, utility services that require payment on a nionthly basis
are examples of
services that result in recurrent periodic expenses. Conversely, video-on-
demand services,
which result in an irregular expense when the video is demanded, are an
example of services
that result in recurrent expenses that are nonperiodic.
[0049] In certain specific embodiments, consumers are insulated from the
effects of
high, and increasing, medical and healthcare costs by providing a loan secured
by real
property that may be used to fmance medical and healthcare services. In some
instances,
security for the loan may be provided by the real property and some other
property, such as
by a cash value of the medical and healthcare services in one embodiment.
Examples of
medical and healthcare expenses include fees for physician services and the
services of other
medical practitioners, including both general practitioners and specialists;
dental, vision, and
chiropractic services; medical and healthcare insurance policies and premiums;
prescription
and nonprescription drug costs, as well as the costs of other medical products
such as
syringes; hospital, nursing home, and extended-care facilities fees; fees for
in-home long-
term care; healthcare savings programs, and the like. Merely by way of
example, monthly
premiums paid for insurance coverage are examples of medical and healthcare
services that
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result in periodic expenses, while fees for physician services that result
from sudden illness or
accidents are examples of medical and healthcare fees that might be recurring
even if not
periodic.
[0050] In other specific embodiments, consumers are insulated from the effects
of
food costs by providing a loan secured by real property that may be used to
finance food
expenses through a food-financing program. In some instances, security for the
loan may be
provided by the real property and some other property, such as by a cash value
of the food=
financing program in one embodiment. Some of the food expenses that may be
financed
include food that is purchased for consumption at home, such as when food is
purchased from
a grocery store, specialty food store, convenience store, or the like. In
other instances, the
food expenses arise from the purchase of food for consumption elsewhere, such
as in a
restaurant or other food-selling venue.
[0051] The secured loan is provided in embodiments of the invention by a
"bundling
lender," which is any entity that provides a real-estate-secured loan that
bundles at least some
expenses as part of a financing program. Examples of entities that may be
comprised by the
bundling lender include mortgage brokers, mortgage bankers, commercial banks,
finance
companies, credit unions, insurance companies, stock brokerage firms, and
individual
investors; it is not necessary according to embodiments of the invention that
the bundling
lender be associated with a financial institution. The bundling of the
expenses is coordinated
by a bundling company, which interacts with the bundling lender. An overview
of an
environment in which the bundling company may operate in structuring the loan
is illustrated
schematically with the block diagram of Fig. 1, with the environment denoted
generally by
reference number 101. The description that follows is relatively generic,
referring to how
embodiments of the invention may operate for financing a variety of types of
goods and/or
services. Specific examples are presented later, illustrating specific
applications for certain
types of financed goods and services.
[0052] The bundling company 102 may comprise any entity that offers bundleable
expenses to be included in a loan and/or that facilitates the marketing or
sale of bundleable
expenses. Examples of bundling companies in certain specific embodiments
include
suppliers of products and services, mortgage bankers, mortgage brokers, real
estate agents,
real estate brokers, builders, land developers, financial planners, or various
facilitators such
as independent marketing entities, title companies, insurance companies,
appraisers, etc. The
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bundling company 102 may have relationships with one or more suppliers 104,
although
more generally embodiments of the invention permit the bundled service to be
used for
payment of any expenses as described below. The bundling company 102 may
negotiate
discounted prices for the expenses, using its position as an interface to
large volumes of such
expenses for many potential customers to obtain very favorable prices. For
instance, the
bundling company 102 might negotiate with a chain of supermarkets or a chain
of restaurants
to provide discounts of 5% or 10% on all food costs to customers who bundle
food expenses
as described herein. Such an arrangement may act as an incentive to attract
greater numbers
of customers to the supermarket or restaurant chains that enter such
agreements. Similarly,
the bundling lender 112 may negotiate discounted prices for medical and
healthcare services,
using its position as an interface to large volumes of such medical and
healthcare services for
many potential customers to obtain similarly favorable prices.
[0053] As described in more detail below for various embodiments, the bundling
company 102 may then offer funds to be drawn on for payment of the expenses to
a buyer
110 or seller 111 of real property. The offered prices for the expenses may be
customary
rates, at less than customary rates, and may include a transaction charge. The
buyer and/or
seller are sometimes referred to interchangeably herein as "consumers,"
"customers,"
"borrowers," or "clients," each of which may also refer generally to a
homeowner,
homebuyer, homebuilder, land developer, home seller, property owner, renter,
or tenant,
among others. In addition to interacting with the seller 111 and buyer 110,
the bundling
company 102 may interact with a number of other entities, examples of which
include the
suppliers 104, appraisers 116, and one or more bundling lenders 112, who
actually provide
the loan.
[0054] The bundling company may maintain a customer depository account 114,
where the funds to be used in making payment for the expenses in accordance
with the
financing program are maintained, although in some embodiments the customer
depository
account may be maintained by a separate institution. There are a number of
different ways in
which funds in the customer depository account 114 may be accessed by the
buyer to make
payment for expenses. A convenient mechanism includes use of a debit
instrument 120
issued to the buyer that the buyer may present when making purchases. For
instance, the
debit instrument could comprise a card, such as a magnetic stripe card or
smart card that has
information identifying the buyer 110 and the customer depository account 114
encoded on
the card. Payment is then coordinated by a debit processor 118 when purchases
are made. In
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other instances, the buyer 110 might be provided with a set of checks that may
be used to
draw funds from the customer depository account 114 for purchases.
Alternatively, the buyer
110 may be permitted to make withdrawals from the customer depository account,
such as in
the form of coupons usable at the suppliers 104 or to provide reimbursement
for previously
paid expenses upon production of suitable receipts.
[0055] Various methods of the invention are illustrated for different
embodiments
with the flow diagrams of Figs. 2- 7. The method illustrated with Fig. 2 may
be used in one
embodiment when a seller 111 sells real property to a buyer 110. In response
to the seller
111 offering the real property for sale to the buyer 110 at block 204, the
buyer contacts a
bundling company 102 at block 206 to coordinate funding a customer depository
account 114
to support payment of the expenses and a loan for purchasing the real property
with the
bundleable expenses included. In some instances, the contact with the bundling
company
102 may conveniently proceed through another third party. Also, the buyer 110
may
conveniently use a variety of different sources for identifying a bundling
company 102,
including computer networks, the Internet, computer software tools, and other
electronic
media. The bundling company 102 identifies a number of optional
products/services, and
related financing programs, at block 208 so that a selection of the desired
program may be
made by the buyer 110 at block 210.
[0056] At block 212, a bundling lender 212 is contacted for solicitation of a
bundled
loan for the real property with the selected program. The cost presented to
the buyer 110 may
incorporate the value of the selected expenses into the cost or may
alternatively include a
separate listing of the cost for the bundleable program. In either instance,
the bundling lender
112 may consider the cost or value of the selected program when qualifying the
buyer 110 for
the loan. In some embodiments, qualifying the buyer 110 may comprise obtaining
an
appraisal of the real property with the selected expenses as indicated at
block 214, but this is
not necessary in other embodiments. The appraisal may be obtained by the buyer
110, by the
bundling lender 112, or by a bundling company 102 in different embodiments. If
the buyer
110 qualifies for the loan, it is approved by the bundling lender 112 at block
216.
[0057] In determining whether to approve the loan request, the bundling lender
may
calculate a "back-end ratio" as a measure of the borrower's ability to repay
the loan using
techniques known in the art. A high back-end ratio may disqualify a borrower
from obtaining
a loan. Embodiments of the invention advantageously lower the back-end ratio
by
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eliminating certain borrower payments related to expenses. For example, by
financing the
borrower's expenses in a loan, the back-end ratio may be reduced, permitting
the borrower to
qualify for a larger loan amount. Lowering the back-end ratio also
advantageously permits
the bundling lender to modify its underwriting procedures, making the
borrower's loan
qualification easier. It also permits the lender to structure and offer new
loan products that
are based on this ability to lower the back-end ratio and other defaulting
events. In particular,
this capability is advantageous in structuring new loan products that may be
attractive for sale
in the secondary mortgage marketplace. Embodiments of the invention also
advantageously
expand the ability of bundling lenders to make new types of loans to new
borrowers and to
enter new markets by developing active partnerships with restaurants, grocery
stores, and
other suppliers.
[0058] When the loan is to close, as indicated in the drawing generically by
blocks
218, the buyer 210 typically supplies a down payment at block 220, although in
some
embodiments the loan might be provided without a down payment. The bundling
lender 112
supplies the remainder of the total cost for the real property, plus the money
to fund the
program, as indicated at block 222. The cost of the real property is delivered
to the seller 111
at block 224, and the remainder of the loan amount is deposited into the
customer depository
account 114 at block 228. As indicated at block 229, the buyer may also be
issued a debit
instrument such as a magnetic-stripe card, smart card, or other type of
instrument used in
identifying the customer depository account to make purchases consistent with
terms of the
program.
[0059] The customer depository account 114 may comprise any suitable account,
such as a trust account, an interest-bearing account, an insurance account, or
a bank account,
and in some embodiments the customer depository account 114 may comprise a
plurality of
accounts, which may be maintained by a plurality of different institutions. In
some instances,
separate customer depository accounts may be provided for different classes of
expenses (e.g.
for healthcare expenses, for utility expenses, for food expenses, etc.) or a
single customer
depository account may be segregated for separate tracking of different
classes of products.
Once the funds have been received in the customer depository account 114, the
bundled
program is assigned to the sold property, rather than to the borrower, and
becomes an asset of
the property, thereby conferring on it the status of a real-property interest.
The funds in the
customer depository account 114 may thereafter be used to make payments for
the bundled
expenses. The bundling lender 112 may be issued a document entitling the
bundling lender
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112 to foreclose on the customer depository account upon a default of the
bundling loan by
the borrower. The document typically identifies the funds being held in the
customer
depository account 114, as well as designating the funds as a "prepaid asset"
of the property.
The bundling lender 112 and/or buyer 110 are generally provided with the
ability to obtain
via telephone and/or electronic mechanisms the current cash balance in the
customer
depository account.
[0060] The total loan amount includes the amount of payments for the future
expenses used in supporting the bundled expenses. The future payment amount
for payments
on both the bundled expenses and on the property are amortized over the term
of the loan.
The loan term may advantageously have a term as long as 30 years (or even as
long as 40
years in the case of some real-property loans). This is in contrast to
consumer loans, which
usually have terms of less than five years. In addition, using a structure
that has a real-
property loan with a real-property interest may provide tax advantages, such
as in the United
States where interest on real-property loans may be tax deductible. It is
noted that this
benefit is a consequence of the designation of the prepaid assets as real-
property interests. In
the United States, Freddie Mac and Fannie Mae were chartered by Congress to
provide
liquidity to the mortgage banking industry and are purchasers of more than 90%
of the
mortgage loans that originate in the U.S. In their charter, Freddie Mac and
Fannie Mae could
only purchase loans from mortgage banks that are real property and that do not
include
personal property. This is why a stand-alone television could not be financed
within a
mortgage, but a home theatre could. In response to consumer demand and a
request from the
National Association of Realtors, Freddie Mac designated certain appliances as
providing a
"real-property interest," that permits their cost to be financed with a
mortgage loan.
[0061] After closing, the buyer makes periodic payments to the bundling lender
at
block 230, similar to conventional mortgage payments. These payments may be
made
monthly, biweekly, or according to some other arrangement. In some
embodiments,
additional principal payments may also be accepted with the periodic payments
to the
bundling lender. The payments for the expenses are made from the customer
depository
account at block 232. In embodiments where a debit instrument 120 has been
provided to the
buyer, such payments may be made in the form of a debit transaction at a point-
of-sale, such
as is described further in connection with Fig. 7 below. The duration of the
useable period of
the bundled expenses may be more or less than the original term. For example,
the borrower
may purchase more products/services as a result of changes in family
circumstances,
CA 02595172 2007-07-17
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resulting in more funds being withdrawn from the customer depository account
114. In this
instance, the usable term of the bundled expenses would be less than the
initial term because
the customer depository account will be depleted faster than initially
planned. Coiiversely,
the borrower may use purchase less products/services, resulting in fewer funds
being
withdrawn from the customer depository account. In that case, the term of the
bundled
expenses is longer than the initial term because the funds in the customer
depository account
114 will last longer. As indicated at block 234, funds may sometimes be added
to the
customer depository account to lengthen the usable term of the bundled
expenses. Funds
may be added by the buyer in some embodiments, or may be added by other
entities such as
the bundling company 102 or by the bundling lender 112 as part of a variety of
possible
incentive programs. In some embodiments where separate tracking for different
classes of
products is provided through the use of a segregated account or through the
use of a plurality
of accounts, transfers between the different classes may be enabled.
[0062] A similar method may be implemented in embodiments where an existing
homeowner wishes to refinance an existing mortgage or wishes to take a home-
equity line of
credit secured by the real property. These embodiments are illustrated with
the flow diagram
of Fig. 3 and have a number of aspects in common with aspects of the invention
described in
connection with Fig. 2. The homeowner contacts the bundling company 102 at
block 304 or
block 306 depending on the embodiment, again having the ability to make use of
a variety of
different informational tools to identify the bundling lender and perhaps
making contact
through a third party. Block 304 applies to homeowners seeking to refinance
existing
mortgages and block 306 applies to homeowners seeking a home-equity line of
credit.
Home-equity lines of credit are loans in which the borrower secures the loan
with real
property. They provide borrowers with long-term financing at attractive
interest rates when
compared with consumer loans that have relatively short terms and much higher
interest
rates. They differ from mortgages, which are used to finance the purchase of
real estate.
Highly developed markets exist for both mortgages and home-equity lines of
credit, with
lender being compensated with interest on the principal that is lent. ,
[0063] In either instance, the bundling company 102 may identify a number of
products/services that may be bundled with the loan at block 308, the
different options
permitting different terms, different types of products/services, limitations
on suppliers, etc.
The borrower selects that program he wishes to include with the loan at block
310, including
specification of a term for the program if appropriate. A bundling lender 112
is contacted at
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block 312 with a request to provide a bundled loan for the real property and
the selected
program. The total loan cost is determined by amortizing the cost of both the
underlying loan
and the cost of the selected program. An optional appraisal may be obtained at
block 314,
with the loan being approved by the bundling lender at block 316 if the
borrower meets the
loan requirements.
[0064] At closing 320, the bundling lender 112 provides the refinancing or
home-
equity line of credit at block 324 and deposits funds into the customer
depository account 114
at block 328. The bundling lender 112 is provided at closing with a document
asserting its
right to foreclose against the customer depository account 114 as well as
against the real
property itself in the event of a default. The homeowner may be provided with
a debit
instrument such as a magnetic stripe card or smart card at block 329 to
simplify accessing the
customer depository account 114 in making purchases. After closing, the
relationship
between the borrower and bundling lender is similar to that described above.
The borrower
makes periodic payments to the bundling lender as indicated at block 330 and
payments for
the expenses are made from the customer depository account as indicated at
block 332,
perhaps involving presentation of the debit instrument as described below in
connection with
Fig. 7. Similar to the embodiments described in connection with Fig. 2, the
usable term of
the bundled expenses may be longer or shorter than initially planned,
depending on the rate at
which the funds are used. A provision is therefore provided at block 334 to
permit funds to
be added to the customer depository account to extend its usable term, either
by the borrower
or by another entity such as the bundling company 102 or bundling lender 112
in different
embodiments.
[0065] Fig. 4 provides a similar flow diagram, but reflects aspects of the
invention
relevant to land development by a builder. This embodiment provides an example
where one
of the parties to the sale transaction for real property acts as the bundling
company with the
builder taking on this role, although in alternative embodiments a separate
bundling company
may work with the builder and buyer. The builder generally provides new
construction,
offering the sale of real property to a buyer at block 402. Because the
builder is providing
new construction, the range of options that may be provided as part of the
construction is
diverse. Traditional fixed-cost options that may be offered include such
enhancements as
wood cabinetry, granite countertops, gold bathroom fixtures, upgraded carpet,
and the like.
In addition, the builder may in some embodiments include a products/services
financing
program as part of the standard purchase arrangement. For instance, in one
embodiment, the
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builder may advertise that the sale of each home includes, as standard, five
years of grocery
payments at Safeway and may offer options to provide certain other food costs
at the option
of the buyer - these may be marketed as "upgrades" and may include such things
as five
years of restaurant payments or permitting the grocery payments to be made to
other grocery
suppliers of food. The standard items are identified to the buyer at block 404
and the optional
programs are identified to the buyer at block 406.
[0066] In response to the buyer making a selection of a desired program at
block 408,
the sale cost is updated at block 410 by amortizing the total cost of both the
standard and
upgrade aspects. The bundling lender 112 is contacted at block 412, either by
the buyer, by
the builder, or through another third party, and asked to provide terms for a
loan to purchase
real property with the selected program, as well as any other options that may
have been
selected. The bundling lender 112 performs an analysis to determine whether to
approve the
loan, and performing that analysis may sometimes include obtaining an
appraisal of the
property with the selected program at block 414. Approval of the loan by the
bundling lender
is indicated at block 416 and, as previously noted, may comprise calculation
of a back-end
ratio that accounts for the reduction in expenses faced by the borrower as a
result of their
bundling with the loan.
[0067] Closing is denoted generally by blocks 418. As part of closing on the
loan, the
buyer may supply a down payment at block 420, although in some embodiments the
loan
may close without any down payment. The bundling lender 112 supplies the
remainder of
the cost for purchase of the real property as well as for financing the costs
of the selected
expenses at block 422. The cost of the real property is delivered to the
builder at block 424
and the remainder of the loan amount is deposited into the customer depository
account 114
at block 428. The bundling lender 112 is also provided with documentary
authority to
foreclose on the customer depository account as well as on the real property
in the event that
the borrower defaults. In addition, in some embodiments, the buyer may be
provided with a
debit instrument at block 429; such a debit instrument advantageously permits
purchases to
be supported directly be the customer depository account at the point of sale
over existing
debit networks by identifying the customer depository account 114.
[0068] After closing 418, the builder is no longer involved. The buyer makes
periodic payments to the bundling lender 112 at block 430 to satisfy his
obligations under the
loan arrangement. Payments for expenses are made at block 432 from the
customer
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depository account 114, perhaps using the debit instrument provided at block
429. As
previously noted for other embodiments, the length of time that the customer
depository
account may cover expenses may vary, depending on how much is actually spent
in
satisfying those expenses. In cases where the term that the account covers is
less than
originally expected, a mechanism may exist in some embodiments to add
additional funds to
the customer depository account at block 434, such as by the buyer or by
another entity like
the bundling company or bundling lender.
[0069] In some cases, for any of the embodiments described in connection with
Figs.
2- 4, the owner of real property that secures a loan that bundles a
products/services financing
program may wish to sell the property. The funds in the customer depository
account may be
treated in a number of different ways in different embodiments. For instance,
in some cases,
the owner may transfer the funds from the customer depository account to a
subsequent buyer
of the property. In other cases, the owner may transfer the funds to a new
property that the
owner purchases.
[0070] The descriptions of certain embodiments of the invention above are not
intended to be exhaustive and may be accommodated within a wide range of
lending
products. For example, the loan may comprise any of the following in different
embodiments: a first mortgage secured by the property and perhaps also by the
cash value of
the products/services financing program; a second mortgage secured by the
property and
perhaps also by the cash value of the products/services financing program; a
third mortgage
secured by the property and perhaps also by the cash value of the
products/services financing
program; a refinanced mortgage secured by the property and perhaps also by the
cash value
of the products/services financing program; a home-equity loan secured by
equity in the real
property and perhaps also by the cash value of the products/services fmancing
program; a
home-equity line of credit secured by equity in the real property and perhaps
also by the cash
value of the products/services financing program; a construction loan secured
by the real
property and perhaps also by the cash value of the products/services financing
program; and a
personal note secured by the real property and perhaps also by the cash value
of the
products/services financing program. In some instances, a plurality of loans
may be used to
finance the expenses, such as when they are financed through a first and
second mortgage.
[0071] Each of the descriptions of Figs. 2- 4 above have noted that in some
instances
an appraisal may be sought, such as part of the loan-qualification process. An
overview of
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methods that may be used to perform an appraisal in provided with the flow
diagram of Fig.
5. This method illustrates how the effect of bundling costs with the loan may
be
accommodated as part of the appraisal. It is noted that in some embodiments
the real
property that is the subject of the appraisal may already have a customer
depository account
associated with it and classified as a prepaid asset of the property. This is
true, for instance,
in some embodiments described in connection with Fig. 2 where an existing home
might be
sold to a new owner. Such a pre-existing customer depository account may be
used for
payment of expenses or could be used for payment of other types of expenses
like those
described in detail in the related and parent applications.
[0072] At block 504 of Fig. 5, an appraiser 116 receives an order for an
appraisal,
usually from a bundling lender or from a borrower, although in some instances
the request for
an appraisal may be transmitted from the bundling company or through some
third party.
The appraiser 116 collects information on the remaining value of products
and/or services,
including a products/services financing program supported by a customer
depository account
associated with the property, as indicated at block 512. This value acts to
increase the base
value of the property. These products and/or services are termed "seller
products/services"
because they represent a prepaid asset of the seller's property and are
distinct from the "buyer
products/services" that the buyer wishes to bundle. In embodiments where the
seller has no
customer depository account to draw on, such as where the seller is a builder
or where the
seller arranged a loan without such a structure, the base value is equal to
the value only of the
real property. At block 512, the appraiser compares the fair market value of
the property with
the buyer products/services included with its value without the buyer
products/services but
including the seller products/services, if any. The difference between the two
is assigned as a
valuation difference to the property. In most instances, it is expected that
the valuation
difference will be a valuation increase, such as when there are no seller
products/services or
when the value of the seller's customer depository account has been depleted
through prior
payments. The property is accordingly appraised to include the value of the
buyer
products/services at block 516 and the appraisal is transmitted to the lender
or borrower at
block 520.
[0073] Because of the nature of the classification of funds held within the
customer
depository account as a prepaid asset of the property, that value is subject
to foreclosure in
the event of a default on the loan provided by the bundling lender. The
authority for the
bundling lender to foreclose against the funds held within the customer
depository account
CA 02595172 2007-07-17
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may be provided with a document showing the classification of the funds as a
prepaid asset.
Fig. 6 provides a flow diagram illustrating the effect of foreclosure
according to an
embodiment of the invention. At block 604, the bundling lender 112 forecloses
on the real
property itself in a conventional manner. In addition, as indicated at block
608, the bundling
lender 112 may receive information setting forth the remaining value in the
customer
depository account 114, thereby enabling the bundling lender 112 to request
delivery of and
receive the balance of the account at block 612. In some embodiments, the
bundling lender
112 may alternatively provide instructions for the fiinds in the customer
depository account to
be assigned to a new designated real property or to a new buyer of the current
designated
property or to a supplier.
[0074] An illustration of how fiinds in the customer depository account 114
may be
accessed for purchases is provided with the flow diagram of Fig. 7. Briefly,
the funds are
accessed by presentation of the debit instrument at the point-of-sale, with
information from
the debit instrument being used to identify the customer depository account
114 and initiate a
transfer of funds from that account to an account controlled by the selling
merchant.
[0075] Thus, at block 704, a buyer who possesses a debit instrument that
identifies a
customer depository account 114 visits a merchant and selects items for
purchase. When the
buyer is ready to complete the purchase, he presents his debit instrument at
block 708. The
debit instrument may conveniently comprise a magnetic-stripe card or smart
card in some
embodiments. A point-of-sale device at the merchant extracts information from
the debit
instrument, such as by reading the magnetic stripe of a magnetic-stripe card
or by reading a
chip embedded in a smart card. This information may identify the buyer and the
customer
depository account 114 and is combined with other transaction information
specifying a price
of the purchase and forwarded to the debit processor 118 at block 712.
[0076] The information received by the debit processor 118 may be used to
ensure
compliance with terms of the applicable program at block 716. For example, the
buyer
identification included as part of the transaction information may be used to
identify whether
there are restrictions on what type of items may be purchased and where it may
be purchased
according to the program. If the transaction is not in compliance, a return
code may be
returned to the merchant to refuse the transaction at block 724.
[0077] An additional aspect of determining compliance at block 716 may involve
identifying a portion of the transaction as eligible for application to the
customer depository
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account 114, such as when the buyer selects some items that are within the
scope of the
program and other items that are not. The items within the scope of the
program may be
segregated, and the cost for that portion of the transaction determined, from
information that
identifies the products individually. For instance, if the products are
identified with bar codes
that are scanned by the point-of-sale device, the individual products may be
identified using
the Universal Product Code ("UPC") system, the European Article Number ("EAN")
system,
the Global Trade Item Number ("GTIN") system, the Serialized Shipping
Container Code
("SSCC") system, the Global Location Number ("GLN") system, the Global
Returnable
Asset Identifier ("GRAI") system, the Global Individual Asset Identifier
("GIAI") system,
and the Global Service Relation Number ("GSRN") system, among others. Many of
these
systems are currently administered by the Uniform Code Council, Inc. ("UCC")
and EAN
International. While the emphasis of the these organizations is currently on
bar-code
technologies, including Reduced Space Symbology ("RSS") and Composite
Symbology
("CS"), they acknowledge that the systems may alternatively be implemented
using other
technologies, such as with radio-frequency tags. Embodiments of the invention
are not
restricted to any particular classification technology and are intended to
encompass all such
classification systenls.
[0078] Also, the ability of the debit processor 120 to analyze the transaction
information further permits the use of other types of debit instruments,
including even
biometrics that identify the buyer. For example, instead of presenting a
magnetic-stripe card
or smart card as a debit instrument, in some embodiments the buyer may allow
his
fingerprint, iris, or retina to be scanned, or to have his hand or facial
geometry analyzed.
This information is then bundled with the transaction information and analyzed
by the debit
processor 120 to identify the individual from stored biometric records and
thereby determine
any restrictions that apply to the corresponding program and identify the
customer depository
account 114.
[0079) Once full or partial compliance with the program has been verified, the
debit
processor 120 may query the customer depository account 114 to confirm that
sufficient
funds remain in the account to pay for the items. If not, the debit processor
120 returns a
denial code at block 724 so that the merchant may refuse the transaction. If
there are
sufficient funds, the debit processor 120 initiates a transfer at block 728 of
the funds to be
used in paying for the selected items from the customer depository account 114
to an account
controlled by the merchant. An approval code is retu.rned to the point-of-sale
device at block
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732 to confirm that the transfer has been executed and that the merchant
should proceed with
the sale of the items to the buyer. In cases where the transaction involves
the purchase both
of items within the scope of the program and outside the scope of the program,
the approval
code may be accompanied with a specification of the amount that was
transferred between
accounts so that the transaction amount due for the items outside the scope of
the agreement
may be reduced at block 736 by the ainount approved for payment of items
within the scope
of the program. The buyer presents additional payment for the items outside
the scope of the
program at block 740, thereby completing the transaction. The additional
payment may take
the fonn of any payment accepted by the merchant, such as cash, a check, a
credit card, a
debit card to a different account, and the like.
[0080] In many embodiments, the methods described in connection with Figs. 2-
7
may be coordinated by computational devices that provide connectivity as shown
with the
schematic drawing of Fig. 1. A typical structure for such computational
devices is shown in
Fig. 8, which broadly illustrates how individual system elements may be
iinplemented in a
separated or more integrated manner. The computational system 800 is shown
comprised of
hardware elements that are electrically coupled via bus 826, including a host
processor 802,
an input device 804, an output device 806, a storage device 808, a conlputer-
readable storage
media reader 810a, a communications system 814, a processing acceleration unit
816 such as
a DSP or special-purpose processor, and a memory 818. The computer-readable
storage
media reader 810a is further connected to a computer-readable storage medium
810b, the
combination comprehensively representing remote, local, fixed, and/or
removable storage
devices plus storage media for temporarily and/or more permanently containing
computer-
readable information. The communications system 814 may comprise a wired,
wireless,
modem, and/or other type of interfacing connection and permits data to be
exchanged with
the other computational devices such as illustrated by the schematic
arrangement of Fig. 1 to
implement embodiments as described.
[0081] The computational device 800 also comprises software elements, shown as
being currently located within working memory 820, including an operating
system 824 and
other code 822, such as a program designed to implement methods of the
invention. It will
be apparent to those skilled in the art that substantial variations may be
made in accordance
with specific requirements. For example, customized hardware might also be
used and/or
particular elements might be implemented in hardware, software (including
portable
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software, such as applets), or both. Further, connection to other computing
devices such as
network input/output devices may be employed.
2. Healthcare
[0082] To illustrate instances where the bundled products/services include
healthcare
products/services, Fig. 9A. This diagram is divided into several major
categorizations of the
types of services that may be bundled with a loan according to embodiments of
the invention,
but these categorizations are not intended to be exclusive and there are other
categorizations
that will be evident to those of skill in the art upon reading this
disclosure. Block 950
identifies options that the borrower may have to select services of medical
professionals, such
as general medical practitioners, medical specialists, and the like. At block
952, the borrower
is provided with costs for care by such medical professionals, enabling the
borrower to select
those medical-care services that are desired. The cost of the selected medical-
care services is
calculated for a specified usage term, such as for a term of five years, at
block 956.
[0083] A similar procedure is used for the selection of medical-insurance
providers at
block 960, which may include specialized insurance for specialized procedures,
such as
vision insurance, dental insurance, and the like. The borrower is provided
with costs for
medical insurance, perhaps for a number of different providers, at block 962.
The borrower
selects the desired medical insurance at block 964, permitting the cost of the
selected medical
insurance to be calculate for a specified usage term, such as for a term of
five years, at block
966.
[0084] The selection of services for extended care and services from other
healthcare
providers occurs generally at block 970. Extend-care services may include
nursing-home
services, long-term-care assistance services, hospice services, and the like.
The scope of
other healthcare providers is intended to be broad, including such diverse
services as
laboratory services, midwife services, x-ray services, MRI services, CAT-scan
services,
mammography services, and the like. At block 972, the borrower is provided
with costs for
such extended care and other healthcare provider services, permitting the
borrower to make a
selection of such services at block 974. The cost of the selected options is
calculated for a
specified term of usage at block 976.
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[0085] Block 980 indicates the selection of pharmacy and prescription
services,
which includes providing the borrower with costs for prescription and
nonprescription
medication coverage at block 982. After the borrow selects the prescription
and
nonprescription medication coverage that is desired, the cost of the
selections is calculated for
a specified usage term. The various costs of the selections made by the
borrower in each of
blocks 950, 960, 970, and 980 are totaled in order to update the loan cost at
block 914 of Fig.
9A.
[0086] Embodiments of the invention also provide a facility that is connected
with a
public network to coordinate matching healthcare providers to purchasers of
healthcare
services. The public network may conveniently comprise the Internet. The
facility is
configured to provide an interface with the purchasers so that they may enter
information that
is then used to identify potential healthcare providers based on known
information about the
healthcare providers. Examples of the type of information that may be used in
performing a
match includes medical specialty, location, costs, insurance acceptance, and
the like. In
addition, the facility simplifies initial transmission of information to the
healthcare providers.
[0087] A structure that may be used to effect communications among the
different
parties involved is illustrated in Fig. 9B. A relationship is ultimately
desired between the
purchaser 905 and with one or more healthcare providers. The purchaser 905
interacts with
the system through a purchaser computer 908, which may be owned by the
purchaser 905 or
may be another computer used by the purchaser 905 such as at a library, at
work, etc. The
healthcare providers similarly interact with the system through provider
computers 912 and if
an actuary is involved with the process, the actuary interacts with the system
through an
actuary computer 916. Each of these computers 908, 912, and 916 is
interconnected througll
a public network 920 such as the Internet. Advantageously, the public network
920 may be
equipped to accommodate secure transmissions using suitable encryption
protocols to protect
the information transmitted among the parties in implementing methods of the
invention.
[0088] The public network 920 is also interfaced with a coordination system
924 that
has programming instructions to coordinate initiating the desired
relationship. The
coordination system 924 has access to storage devices where information used
in
implementing embodiments of the invention is stored. For example, a provider
database 928
may house provider tables 940 that specify criteria under which the provider
will be suitable
for providing healthcare services. Such information might include types of
medical
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specialties that may be accommodated, minimal service-fee structures, and the
like.
Similarly, a purchaser database 932 may house purchaser tables that specify
criteria under
which a relationship will be acceptable to the purchaser 905, with the
information in the
tables being drawn from received application information. For instance, such
tables might
include a specification of needed medical specialties, acceptable geographical
locations,
acceptable service-fee structures, sex of the healthcare practitioner, and the
like.
Identification of matches is broadly performed by identifying consistencies
between the two
sets of tables 940 and 944, with the results being stored in a results
database 936. The
coordination system 924 may advantageously be operated by a bundling company
102 within
a structure like that shown schematically in Fig. 1.
[0089] Fig. 10 provides a flow diagram that summarizes the types of steps that
may
be taken in performing validation checks on received information. Such
validation checks
may sometimes be limited to checking the format of information, but may
alternatively
include more active checks to ensure some level of correctness of the
information. For
example, the format of a social security number provided by the applicant may
be checked at
block 1004. At one level, such a check might ensure only that the number has
nine digits. At
a more thorough level, the format might be checked by ensuring that the number
provided has
a value that is consistent with structural requirements for the number.
Similarly, an address
might be verified at block 1008 by ensuring that it includes a street address,
a city, and state,
and a ZIP code. Alternatively, a deeper check might be performed to ensure
that the
identification of each of these elements is consistent with each other by
verifying the
presence of the identified city within the identified state and verifying that
the identified
address is within the identified ZIP code. At block 1012, telephone and/or fax
numbers may
be checked by ensuring that they provide an area code and a seven-digit
number, or checked
more thoroughly by verifying with a directory that there is a correspondence
between the
address checked at block 1008 and the number. Similar types of checks may be
performed of
email addresses block 1016. In addition, insurance information for insurance
that may be
used in supporting healthcare services may be validated at block 1020; such
validation may
sometimes including transmitting a validation request over the public network
to the
insurance provider, a feature that may be used in embodiments where
relationships have been
established with insurance providers to permit such information exchange.
[0090] A flow diagram is provided in Fig. 11 to illustrate steps that may be
taken in
obtaining an actuarial score. The actuary computer 916 is contacted at block
1104 over the
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public network and provided with healthcare-purchaser information at block
1108. This
information is extracted from information received from the purchaser and
permits
demographic identifications to be made. For instance, this information may
include the age
of the purchaser, the sex of the purchaser, behavior characteristics of the
purchaser, health
characteristics of the purchaser, and the like. This information may then be
used by the
actuary computer 916 to determine a score that characterizes health risks of
the purchaser in a
simple quantitative way. This actuarial score is received at block 1112 and
may be applied at
block 1116 in matching the applicant to potential healthcare providers.
[0091] Figs. 12 and 13 illustrate how information may be filtered in
performing a
match and in transferring relevant information to identified healthcare
providers. Briefly, the
coordination system 924 runs a software filter that matches data in the
purchaser tables 924
as extracted from the completed application with preset criteria established
by the healthcare
providers aiid stored in the provider tables 940. The correlation between
different criteria
1204 established by the providers and between the data extracted 1208 from the
application
may permit a match with a plurality of different healthcare providers 1212, as
illustrated
schematically in Fig. 12.
[0092] The flow diagram of Fig. 13 shows one way in which the structure shown
in
Fig. 12 may be used to filter the results. At block 1304, the system begins by
considering an
initial healthcare provider, say provider 1 shown at block 1212-1 of Fig. 12.
The preset
criteria for this provider are read at block 1308 and checked at block 1312 to
see whether
they match the data statements 1208 extracted from the application
information. If there is a
match, application information is transmitted to that healthcare provider at
block 1316 and a
record is kept that a match was found. Transmission of application information
to the
healthcare provider permits the healthcare provider to participate in bids for
the purchaser's
business. The application information generally includes sufficient
information to allow the
healthcare provider to evaluate the likely costs and risks associated with the
desired
healthcare service and to generate parameters defining its bid. For instance,
the application
information might include a specification by the healthcare purchaser of a
maximum monthly
amount that can be afforded towards the services, sometimes including amounts
made
available through the customer depository account 926 associated with the
purchaser's loan.
The application information may also be used to define a categorization of the
healthcare
purchase, according to such relevant criteria as whether the healthcare
services will be for a
newly married person, for a person with one child, for a self-employed person,
for a new
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homeowner, for an individual with no major medical problems, and the like. The
parameters
that define the provider's bid may include certain restrictions, such as
limitations on
treatment options, limitations on drug types, and the like, in order to comply
with the
application criteria.
[0093] This process is repeated for all potential providers by making a check
at block
1324 whether there are additional providers to be considered. If so, the
system advances to
the next healthcare provider at block 1320 and repeats the process.
[0094] This is done until there are no other providers to be considered, the
system
having identified all providers who have criteria consistent with information
provided by the
applicant and having transmitted application information to those providers.
At block 1328,
the matched providers are accordingly identified to the healthcare purchaser
905 to perniit the
purchaser to make a selection. This may advantageously be accomplished through
operation of the coordination system 924 by the bundling company 954 to
provide a
convenient comparison interface. As indicated at block 1332, such an interface
could include
a software-generated table of the various bids with a tabular summary of
prices, benefits,
restrictions, and other program features to permit the healthcare purchaser to
evaluate the
offerings. In some instances, the coordination system 924 may also apply
selection criteria to
identify a "Top 5" or "Top 3" offerings to simplify the display. Such
arrangements
conveniently permit the healthcare purchaser to quickly analyze the proposed
offerings in an
unbiased environment to select the desired provider.
[0095] . In some embodiments, a mechanism may also be provided for "rebids,"
as
indicated at block 1336. Such rebids permit modifications of original proposed
offerings by
the healthcare providers based on additional information. This additional
information may be
provided by the healthcare purchaser in response to specific queries generated
by the
healthcare provider, may be volunteered by the healthcare purchaser after
reviewing the
original bids, or may be provided by the healthcare provider in different
instances. Such a
rebidding procedure may be iterative to progressively narrow the purchaser's
search and may
conveniently be performed in a real-time interactive fashion.
3. Food
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[0096] Different food-financing programs may include such features as
permitting or
excluding purchases of food to be consumed away from home such as at
restaurants,
imposing restrictions on which merchants may be used to purchase the food or
offering
unrestricted purchases, defining different time periods such as one year, two
years, five years,
and the like over which food may be purchased, etc. For instance, one program
might
provide two years of food purchases to be made only at grocery stores. Another
program
might provide five years of food purchases at any food merchant, including
grocery stores
and restaurants. Still another program might provide five years of food
purchases at any
restaurant, but with all grocery purchases to be made at a Safeway store.
Still other variations
are possible and other factors may be included in defining different food-
financing programs.
Different fees may be imposed for different programs in accordance with the
level of
flexibility and time commitment the buyer wishes.
4. Fiber-Network Securitization
[0097] Embodiments of the invention also provide for the securitization of
fiber-optic
and high-speed wireless networks. Access to the fiber and the high-speed
wireless networks
by a homeowner may be included as part of the products and/or services that
are bundled
with a loan secured by real property, such as a mortgage or home equity line
of credit. A
general overview of a structure that may be used in providing services over
such fiber-optic
and high-speed wireless networks is illustrated schematically in Fig. 14.
Access to the various
networks, which are shown in the drawing as a voice network 1420, a video
network 1424,
and a data network 1428, is made over fiber-optic and wireless communication
lines, which
are shown in the drawing as solid lines. Merely by way of example, the voice
network 1420
may provide high-speed telephone communications service, the video network
1424 may
provide television content, and the data network 1428 may provide Internet
service. The
illustration of three networks is not intended to be limiting and other
networks may be
provided in different embodiments, providing combinations or portions of the
illustrative
services or perhaps providing additional services.
[0098] Access to the networks' 1420, 1424, and 1428 is made possible through
fiber-
optic cable and high-speed wireless equipment that is deployed throughout a
geographical
region. For example, in the United States, major fiber-optic backbone
structures connect the
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vast majority of U.S. cities to such networks. These fiber distributions
include point-of-
presence nodes 1412, which are junction locations that permit connections to
be made to
allow smaller towns and subdivisions access to the networks 1420, 1424, and
1428. Within
such towns and at entrances to such subdivisions, the fiber lines are split
into smaller bundles,
perhaps with divisions being performed at multiple nodes, with individual
fiber lines
eventually being provided to endpoint locations 1416. The endpoint locations
may comprise
individual houses, apartments, businesses, or other locations. In addition, a
wireless network
can overlay the coinmunity like a "cloud" affording the citizens connectivity
to the fiber-
optic backbone.
[0099] Traffic over the fiber-optic lines and the high-speed wireless network
from the
various networks 1420, 1424, and 1428 is directed by a network operations
center 1404,
which may be a manned location that houses equipment used in delivering voice,
video, data,
home security, and perhaps other services from the networks. For example, the
network
operations center 1404 may receive television content from one or more
wholesale providers
of such content from over fiber lines or alternatively from satellite
transmissions. In one
embodiment, the television signal is distributed to customers over the fiber
lines using
internet protocol television ("IPTV"), a recently developed protocol that
enables such
transmissions. Dial-tone telephone functionality may also be transmitted over
the fiber lines
from the network operations center 1404 to the endpoint locations 1416 in one
embodiment
using a "soft switch," which connects Voice over Internet Protocol ("VoIP") to
the public
telephone system. Personnel located at the network operations center 1404 may
monitor the
integrity of the fiber distribution and the quality of service being delivered
to the customers.
[0100] The network operations center 1404 may also monitor and control a
plurality
of local distribution centers 1408. It is generally anticipated that each of
the local distribution
centers 1408 will be unmanned, but this is not a requirement and in some
instances one or
more of the local distribution centers 1408 may have some personnel. The local
distribution
centers 1408 act to extend the effective coverage of the network operations
center 1404. The
range of the network operations center 1404 to deliver the network services is
generally a
fun.ction of the cost of transporting the content provided by those networks
1420, 1424, and
1428 over the fiber and wireless structure. The costs associated with laying
the fiber may
vary according to a number of factors, including the capacity of the
individual fiber lines, the
soil conditions for trenching, and the like. In providing an illustration
below, the costs for
providing fiber may be considered in three categories. First is the cost of
providing a fiber
CA 02595172 2007-07-17
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and high-speed wireless connection from the fiber backbone to the network
operations center
1404; this cost may vary depending on the cost charged by the owner of the
fiber line.
Second is the cost of distributing the fiber from the network operations
center 104 and/or the
local distribution center 1408 to the subdivision; this is referred to in the
art as the fiber's
"common area." Third is the cost of bringing the fiber line from the street to
the house; this
is referred to in the art as the fiber "drop."
[0101] The securitization of the fiber network may be implemented as
illustrated with
the flow diagram of Fig. 15. At block 1504, an investor purchases a fiber
investment coupon
that is tied to the price of the fiber unit cost, usually from the bundling
company 102. In
some instances, the coupon may be sold by a stock broker, financial advisor,
or other entity in
the business of selling investment and security instruments to accredited and
non-accredited
investors, with "accredited investors" referring herein to investors as
defined in Rule 501(a)
of Regulation D of the Securities and Exchange Commission, the entire
disclosure of which
is incorporated herein by reference for all purposes. The coupon has a face
value that is
greater than the cost of the coupon, being, for example, twice the cost of the
coupon, three
times the cost of the coupon, or five times the cost of the coupon in
different embodiments.
The coupon also has a maturity date that is related to the ratio of its face
value to purchase
cost. For example. Each coupon has an undivided interest in the fiber and high-
speed
wireless network connection to each lot or home in a selected subdivision. In
some
embodiments, the redemption of the coupon, i.e. payment of the face value plus
interested
earned to the investor by the bundling company 102, is based on a first-in-
first-out formula.
Thus, as indicated at block 1508, coupons may be recorded as they are sold
according to the
date or purchase.
(0102] A check is made at block 1512 whether a lot or home in the subdivision
has
been sold. If so, proceeds from the loan closing, particularly the payment of
the network
access charge, are used at block 1516 to redeem the earliest-dated coupon(s).
Each lot or
home would thus have attached to it the network access charge and a fixed
period of
telecommunications charges. If not lots or homes are sold and a particular
coupon has not
been redeemed by the bundling company 102, the coupon begins to earn interest
at block
1524 until it is redeemed at block 1520. Anytime after the maturity date, the
bundling
company 102 may redeem the coupon, with the coupon holder being paid the face
value of
the coupon plus any earned interest. In such embodiments, the investor has no
demand or
"put" rights for redemption of the coupon, which is limited to occurring as a
result of a lot or
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home closing containing the network access charge, subject to the first-in-
first-out formula,
or by active redemption by the bundling company 102. Each coupon is secured by
an
undivided interest in the fiber cable and wireless network deployment in the
subdivision and
the revenue received by the bundling company 102 from the services delivered
over the fiber
and high-speed wireless connections to the homes in the subdivision. In
embodiments where
payment of the network access charge is not used by the bundling company 102
to redeem a
coupon, other funding sources may be used, one example being USDA funding. In
such an
embodiment, the loan may be paid off using proceeds from homeowner loans when
a
homeowner finances his telecommunications services and the network access
cost.
[0103] With such an arrangement, the bundling company 102 receives payment
from
the initial homeowner to cover the cost of: (1) the proportionate cost of the
network
operations center 1404 and/or local distribution center(s) 108; (2) the
proportionate cost of
the common-area fiber and high-speed wireless deployment; and (3) the cost of
the fiber drop
to the home and the wireless equipment necessary to effect wireless
connectivity to the fiber
network. The arrangement advantageously mitigates the cost associated with
laying optical-
fiber lines and high-speed wireless equipment in and to a subdivision and the
costs associated
with building and equipping the network operations center 1404 and/or local
distribution
center(s) 1408. In addition, the bundling company advantageously acquires
ownership to the
fiber lines in a subdivision and increases balance-sheet assets. Advantages
also inure to the
homeowners by realizing an increase in property values. These various
advantages may be
understood by considering the following example, which is provided merely for
purposes of
illustration and is not intended to be limiting.
Examples
[0104] Certain benefits and advantages of embodiments of the invention are
evident
from the following description of specific examples.
[0105] Example No. 1: In a first example, a consumer wishes to increase
monthly
cashflow by lowering monthly cash expenses. As part of a refinancing of the
consumer's
home mortgage to reduce the payment by taking advantage of a reduction in
interest rates, the
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-- - - t
customer bundles an Internet service having a retail monthly price of $50.00.
By using a
mortgage loan amortized over 30 years, the monthly cash expense for the
Internet service is
reduced to about $14.00.
[0106] Example No. 2: In a second example, a prospective homeowner anticipates
paying an average of about $100 per month for video/television, telephone/long
distance,
Iiiternet access, and home-security monitoring, in addition to about $150 in
utilities, for total
monthly expenses of $250. Over five years, the prospective homeowner thus
expects to pay
about $15,000 for these surfaces. The prospective homeowner decides to
purchase a home
having a base appraised value of $200,000 and to bundle these costs with the
mortgage. The
total appraised value is the sum of the base appraised value of the home and
the five years of
services for a total of $215,000. The homeowner closes by making a 20%
downpayment on a
6%-interest loan, providing a mortgage amount of $172,000. The borrower's
mortgage
payment is thus $1031/month. If the borrower had taken a loan only on the real
property for
80% of the $200,000, his mortgage payment would have been $959/month. While
the
increase in the loan payment is $72/month, the monthly expenses of $250 have
been
eliminated since they are paid from an associated customer depository account,
providing the
homeowner with a monthly cashflow increase of $178.
[0107] This advantage may be exploited further by noting that the mortgage
interest is
tax deductible in the United States. Using a 30% combined state and federal
tax rate, the
"after tax" value of the $72/month difference in payments is effectively $50,
providing the
homeowner with $200/month in increased average cashflow.
[0108] Example No. 3: In a third example, the same scenario as presented in
Example No. 2 is repeated, with the homeowner this time investing the
additional cashflow in
an interest-bearing account at a 5%/year interest rate. At the end of the 60
months of paid
services, the savings accumulation would by $15,298. This corresponds to an
average
monthly increase in cash flow of $255, more than the cost of the services
being financed.
While the effective cost of the services averaged over 60 months might be
$280/month
because of rate increases, the average cost to the homeowner is fixed in
accordance with the
invention at a negotiated rate of $250. Since the average increase by
investing the savings
exceeds this fixed cost, the homeowner has effectively received the bundled
services for free.
[0109] The homeowner is also insulated from price volatility of the services.
A spike
in energy costs will not force the homeowner into a circumstance where he must
make a
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decision of whether to pay the mortgage or make the energy payment one month.
This is
beneficial not only to the homeowner, but also to the lender who is insulated
from
circumstances that not uncommonly result in mortgage defaults.
[0110] Example No. 4: In a fourth example, the same scenario as presented in
Example No. 3 is repeated, with the homeowner deciding to pay off the mortgage
at the end
of the five-year period. The mortgage balance is $160,053, which may be
compared with a
balance of $148,887 that would have resulted if the borrower had financed only
the real
property at $200,000. The difference in pay-off amounts is $11,167, which is
more than
offset by the accumulated savings of $15,298, the homeowner being $4131 ahead
of a
conventional arrangement.
[0111] Example No. 5: In a fifth example, the same scenario as presented in
Example
No. 3 is repeated, with the homeowner deciding to renew the arrangement and
purchase
another five-year term of services. This can be done in at least three
different ways: (1) by
refinancing the home and including another five-year term of bundled services;
(2) by
keeping the first mortgage and obtaining a home-equity line of credit to pay
for and bundle
the services; or (3) by paying retail for the services. If the homeowner
chooses the first
option, the accumulated savings at the end of 30 years would by approximately
$237,132,
with a net savings after paying off the mortgage differential of $118,586. If
the homeowner
chooses the second option, the overall accumulated savings at the end of 30
years would be
approximately $148,250, with a net savings of $52,437. If the homeowner
chooses the third
option, the overall accumulated savings at the end of 30 years would by
$17,409, with a net
savings of $17,409.
[0112] Example No. 6: In a sixth example, a bundling lender simultaneously
originates a first mortgage loan and a second mortgage loan. The cost of the
bundled
products and services are included in the second mortgage loan. This permits
the buyer of
the real property to acquire both it and the bundled products and services for
"no money
down." For example, the first mortgage may be an 80% loan-to-value loan,
leaving 20%
equity available for the second mortgage. For a property having an appraised
value of
$200,000, including $15,000 of bundled products and services, the 80% loan is
for $160,000
and the second mortgage is for $40,000. At the loan closings, the second
mortgage loan
funds the customer depository account in the amount of $15,000 for satisfying
recurring
expenses for the products and services. The borrower benefits by not having to
use any cash
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to purchase the property and the bundled products and services, as well as by
avoiding the
mortgage-insurance requirement attached to loans of 90% loan-to-value or
greater. The
bundling lender considers the cost of the bundled products and services in
qualifying the
borrower for two loans, one being a bundled loan, and may order an appraisal
and identify the
bundled products and services with the property. Once the borrower qualifies
for the bundled
loan, the bundling lender commits the funds for payment of the recurring
products and
services and distributes the funds in accordance with a predetermined
agreement.
[0113] Example No. 7: In a seventh example, a homeowner decides to sell his
present home with a balance remaining in the customer depository account. The
homeowner
transfers the funds remaining in the customer depository account to the new
purchaser of the
existing property.
[0114] Exam~ple No. 8: In an eighth example, a homeowner decides to sell his
present
home with a balance remaining in the customer depository account. The
homeowner
transfers the funds remaining in the customer depository account to the new,
second property.
[0115] Example No. 9: In a ninth example, a real-property owner has bundled
products and services totally $70,000 with a loan secured by the real
property. The bundling
company and bundling lender have a contractual arrangement requiring the
bundling
company to pay a guarantee amount from the customer depository account in the
event the
owner defaults on loan payments. The owner defaults in the first year after
acquiring the
loan. The bundling company therefore pays the bundling lender $70,000.
[0116] Example No. 10: In a tenth example, the same scenario is presented as
described for Example No. 9, except that the owner defaults in the third year
after acquiring
the loan. The bundling company therefore pays the bundling lender $45,000.
[0117] Exaanble No. 11: In an eleventh example, the same scenario is presented
as
described for Example No. 9, except that the contractual arrangement specifies
that the
bundling company will assume ownership of the real property and assume
responsibility for
making loan payments in the event of a default. When the owner defaults, the
bundling
company thus assumes such ownership and responsibility.
[0118] Example No. 12: In a twelfth example, a consumer wishes to increase
monthly cashflow by lowering monthly cash expenses. As part of a refinancing
of the
consumer's home mortgage to reduce the payment by taking advantage of a
reduction in
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interest rates, the customer bundles health insurance for a family having a
retail monthly
price of $500.00. By using a mortgage loan amortized over 30 years, the
monthly cash
expense for the health insurance is reduced to about $145.00.
[0119] ExMle No. 13: In a thirteenth example, a prospective homeowner
anticipates paying an average of about $222 per month for medical and
healthcare premiums,
in addition to about $192 in monthly costs for prescription drugs, for total
monthly expenses
of $414. Over five years, the prospective homeowner thus expects to pay about
$24,840 for
these medical and healthcare services. The prospective homeowner decides to
purchase a
home having a base appraised value of $200,000 and to bundle these costs with
the mortgage.
The total appraised value is the sum of the base appraised value of the home
and the five
years of inedical/healthcare services for a total of $224,840. The homeowner
closes by
making a 20% downpayment on a 6%-interest loan, providing a mortgage amount of
$179,872. The borrower's mortgage payment is thus $1078/month. If the borrower
had
taken a loan only on the real property for 80% of the $200,000, his mortgage
payment would
have been $959/month. While the increase in the loan payment is $119/month,
the monthly
expenses of $414 have been eliminated since they are paid from an associated
customer
depository account, providing the homeowner with a monthly cashflow increase
of $295.
[0120] This advantage may be exploited further by noting that the mortgage
interest is
tax deductible in the United States. Using a 30% combined state and federal
tax rate, the
"after tax" value of the $119/month difference in payments is effectively $83,
providing the
homeowner with $331/month in increased average cashflow.
[0121] Example No. 14: In a fourteenth example, the same scenario as presented
in
Example No. 13 is repeated, with the homeowner this time investing the
additional cashflow
in an interest-bearing account at a 5%/year interest rate. At the end of the
60 months of paid
services, the savings accumulation would by $25,124. This corresponds to an
average
monthly increase in cash flow of $419, more than the cost of the services
being financed.
While the effective cost of the services averaged over 60 months might be
$500/month
because of rate increases, the average cost to the homeowner is fixed in
accordance with the
invention at a negotiated rate of $414. Since the average increase by
investing the savings
exceeds this fixed cost, the homeowner has effectively received the bundled
services for free.
[0122] The homeowner is also insulated from price volatility of the services.
A spike
in medical or healthcare costs as a result of illness or accident will not
force the homeowner
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into a circumstance where he must make a decision of whether to pay the
mortgage or make
the healthcare payment. This is beneficial not only to the homeowner, but also
to the lender
who is insulated from circumstances that not uncommonly result in mortgage
defaults.
[0123] Example No. 15: In a fifteenth example, the same scenario as presented
in
Example No. 14 is repeated, with the homeowner deciding to pay off the
mortgage at the end
of the five-year period. The mortgage balance is $167,379, which may be
compared with a
balance of $148,887 that would have resulted if the borrower had financed only
the real
property at $200,000. The difference in pay-off amounts is $18,492, which is
more than
offset by the accumulated savings of $25,124, the homeowner being $6632 ahead
of a
conventional arrangement.
[0124] Example No. 16: In a sixteenth example, the same scenario as presented
in
Example No. 14 is repeated, with the homeowner deciding to renew the
arrangement and
purchase another five-year term of services. This can be done in at least
three different ways:
(1) by refinancing the home and including another five-year term of bundled
services; (2) by
keeping the first mortgage and obtaining a home-equity line of credit to pay
for and bundle
the services; or (3) by paying retail for the medical and healthcare services.
If the
homeowner chooses the first option, the accumulated savings at the end of 30
years would by
approximately $312,630, with a net savings after paying off the mortgage
differential of
$153,274. If the homeowner chooses the second option, the overall accumulated
savings at
the end of 30 years would be approximately $238,478, with a net savings of
$84,105. If the
homeowner chooses the third option, the overall accumulated savings at the end
of 30 years
would by $28,102, with a net savings of $28,102.
[0125] Example No. 17: In a seventeenth example, a prospective homeowner
anticipates paying an average of about $500 per month for groceries, in
addition to about
$200 per month for restaurants, for total monthly food expenses of $700. Over
five years, the
prospective homeowner thus expects to pay about $42,000 for these food
expenses. The
prospective homeowner decides to purchase a home having a base appraised value
of
$300,000 and to bundle these costs with the mortgage. The total appraised
value is the sum
of the base appraised value of the home and the five years of food expenses
for a total of
$342,000. The homeowner closes by making a 20% down payment on a 6%-interest
loan,
providing a mortgage amount of $273,600. The borrower's mortgage payment is
thus
$1640/month. If the borrower had taken a loan only on the real property for
80% of the
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$300,000, his mortgage payment would have been $1439/month. While the increase
in the
loan payment is $201/month, the monthly expenses of $700 have been eliminated
since they
are paid from an associated customer depository account, providing the
homeowner witll an
increased monthly cashflow increase of about $500.
[0126] This advantage may be exploited further by noting that the mortgage
interest is
tax deductible in the United States. Using a 30% combined state and federal
tax rate, the
"after tax" value of the $201/month difference in payments is effectively
$141, providing the
homeowner with $559/month in increased average cashflow.
[0127] Example No. 18: In an eighteenth example, the same scenario as
presented in
Example No. 17 is repeated, with the homeowner this time investing the
additional cashflow
in an interest-bearing account at a 5%/year interest rate. At the end of the
60 months of paid
services, the savings accumulation would be $42,484. This corresponds to an
average
monthly increase in cash flow of $708, more than the cost of the food being
financed. While
the effective cost of the services averaged over 60 months might be $800/month
because of
increases in food costs, the average cost to the homeowner is fixed in
accordance with the
invention at a negotiated rate of $700. Since the average increase by
investing the savings
exceeds this fixed cost, the homeowner has effectively received the food for
free.
[0128] The homeowner is also insulated from price volatility of food costs.
This is
beneficial not only to the homeowiier, but also to the lender who is insulated
from
circumstances that not uncommonly result in mortgage defaults.
[0129] Example No. 19: In a nineteenth example, the same scenario as presented
in
Example No. 18 is repeated, with the homeowner deciding to pay off the
mortgage at the end
of the five-year period. The mortgage balance is $254,597, which may be
compared with a
balance of $223,330 that would have resulted if the borrower had financed only
the real
property at $300,000. The difference in pay-off amounts is $31,267, which is
more than
offset by the accumulated savings of $42,484, the homeowner being $11,217
ahead of a
conventional arrangement.
[0130] Example No. 20: In a twentieth example, the same scenario as presented
in
Example No. 18 is repeated, with the homeowner deciding to renew the
arrangement and
purchase another five-year term of food expenses. This can be done in at least
three different
ways: (1) by refinancing the home and including another five-year term of
bundled food
expenses; (2) by keeping the first mortgage and obtaining a home-equity line
of credit to pay
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for and bundle the food expenses; or (3) by paying retail for the food
expenses. If the
homeowner chooses the first option, the accumulated savings at the end of 30
years would be
approximately $527,976, with a net savings after paying off the mortgage
differential of
$307,397. If the homeowner chooses the second option, the overall accumulated
savings at
the end of 30 years would be approximately $402,746, with a net savings of
$163,1735. If
the homeowner chooses the third option, the overall accumulated savings at the
end of 30
years would by $47,307, with a net savings of $47,307.
[0131] Example No. 21: In a twenty-first example, a bundling lender
simultaneously
originates a first mortgage loan and a second mortgage loan. The cost of the
bundled food
expenses are included in the second mortgage loan. This permits the buyer of
the real
property to acquire both it and the bundled food expenses for "no money down."
For
example, the first mortgage may be an 80% loan-to-value loan, leaving 20%
equity available
for the second mortgage. For a property having an appraised value of $300,000,
including
$50,000 of bundled food expenses, the 80% loan is for $280,000 and the second
mortgage is
for $70,000. At the loan closings, the second mortgage loan funds the customer
depository
account in the amount of $50,000 for satisfying the food expenses. The
borrower benefits by
not having to use any cash to purchase the property and the bundled food
expenses, as well as
by avoiding the mortgage-insurance requirement attached to loans of 90% loan-
to-value or
greater. The bundling lender considers the cost of the bundled food expenses
in qualifying
the borrower for two loans, one being a bundled loan, and may order an
appraisal and identify
the bundled food expenses with the property. Once the borrower qualifies for
the bundled
loan, the bundling lender commits the funds for payment of the food expenses
and distributes
the funds in accordance with a predetermined agreement as described above.
[0132] Example No. 22: In a twenty-second example, fiber-network
securitization is
illustrated. Merely by way of illustration, it is estimated that currently the
average cost to
equip a network operations center 1404 with the technology to deliver voice,
video, home
security, and network data is about $1.8 million, plus staffing costs. The
cost of an
unmanned local distribution center is estimated to be about $1,200,000 with no
staffing costs.
Laying 24-strand fiber to and throughout a subdivision, the common area,
currently costs
about $2 per running foot when the utility trench (for connecting sewer,
water, and electrical
in-ground service) is open. A typical subdivision may have an aggregated
average of about
375 running feet per house, resulting in a common-area cost per house of about
$750. The
drop might average about 150 feet of fiber per house, resulting in a drop cost
of about $300.
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[0133] In addition to these costs, are costs of the network operations center
1404 and
the local distribution center(s) 1408 amortized over the number of homes in
the subdivision.
For 2500 homes serviced by the network operations center 1404 and the local
distribution
ceiiter(s) 108, this charge is about $720 per house. The total "fiber unit
cost" per house in
this example is thus about $1770. To make the fiber connection to each house
operational,
certain electronic equipment is additionally connected to the fiber line, with
the approximate
cost per house being $1150, including installation fees. The total cost to
activate the networlc
for each house is thus about $2920, determined by conibining these
electronics' costs with
the fiber unit cost.
[0134] In this example, the fiber investment coupons are sold for $1770, an
amount
equal to the fiber unit cost, with each fiber investment coupon having a face
value of $3540,
i.e. twice its cost, and a maturity date twenty-four months from its date of
issuance. The cost
to finance the fiber network is thus $1770 using this program, resulting in a
network access
charge per home of $4690, computed as the sum of the fiber unit cost, the
electronic
equipment and installation cost, and securitization financing cost.
[0135] When a homeowner purchases bundled telecommunications services, the
$4690 network access charge is included and results in a monthly cost of about
$20 after
accounting for its tax deductibility. Over five years, the homeowner's cost
for the network
access charge is thus about $1200. But the fiber connectivity has increased
the value of the
home. There are at least two methods by which this appreciation may be valued.
First, the
value of the fiber connection to the home may be considered to appreciate at
the rate of the
home's appreciation. For instance, if the home appreciated 11 %lyear, at the
end of five years
the network access charge valuation may rise from $4690 to $5485.
Alternatively, the
valuation may be made by determining the cost of providing the fiber
connection. While the
initial cost of the network access charge was based on the deployment of the
fiber when the
utility trench is open, once the trench is closed and improvements have been
made by
completing streets and curbing, the cost for laying the fiber is between about
$10/foot and
$20/foot depending on soil conditions. In the example where a house has a
total of 375
running feet of common area and 150 feet of drop, for a total of 525 feet,
trenching costs at
$10/foot result in a fiber deployment value of $5250. Together with the $720
amortized
value of the network operations center 1404 and/or local distribution
center(s) 1408, the value
of the fiber connection is about $5970. While the homeowner paid $1200 over
five years for
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the network access charge, this resulted in an increase in home value between
about $5500
and $6000.
[0136] When the homeowner decides to move, he can sell the network access
charge
to the bundling company 102. For instance, the bundling company may pay an
amount for
the network access charge equal to 10% of the annual telecommunications
revenue for ten
years purchased by the new homeowner when the new homeowner contracts for the
bundled
telecommunications services. If a new homeowner purchases $18,000 of
telecommunications
services over five years, the annual revenue recognition would be $3600 per
year. Tlius, the
initial homeowner purchasing the lot or house, who pays $1200 out of pocket
for the network
access charge, may receive a $5970 increase in property value over five years
and $3600
from the bundling company 202 on the purchase of the network access charge for
a total of
$9570. This represents a net gain of $8370 on the homeowner's $1200 cost.
[0137] The bundling company 102 would carry the value of the fiber on its
balance
sheet in the following way: (1) $2 cost per running foot when the fiber is
initially deployed
and the trench is open; (2) an increase in the cost per running foot to $10 -
20 after the trench
is covered and improvements have been made; and (3) as much as $15,000 per
subscriber
when the fiber has been activated and the subscriber is receiving
telecommunications
services, a valuation based on current third-party valuations from the cable
and
telecommunications industries. The balance sheet for the bundling company 102
for a 2500-
home subdivision would thus grow from a value of $4.4 million (2500 homes x
$1770) to
$8.625 million (2500 homes x $3540) when the trench is covered and
improvements have
been made to $37.5 million (2500 subscribers x $15,000) when homeowners are
using the
telecommunications services.
[0138] Relative to cashflow, in this example the bundling company 102 receives
$1770 per lot or house for each fiber investment sold, with the land
developer, homebuilder,
or homeowner paying the bundling company for the network access charge
calculated to be
$3540. If the payment is made within the twenty-four months preceding the
maturity date,
the bundling company 102 receives interest on the $3540 to the date the funds
are used to
redeem the coupon, which may be performed by paying the investor the face
value of $3540.
[0139] When a homeowner moves and the bundling company 102 purchases the
network access charge, the purchase price would be $3600. Based on an updated
valuation of
the value of the telecommunications connection; as opposed to its value when
it was
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deployed, the bundling company 102 would resell the network access charge for
up to about
$5970, representing a gain of about $2370 with the bundling company 102
retaining
ownership of the fiber.
[0140] This securitization arrangement thus provides a number of benefits both
for
the bundling company and for the homeowners purchasing telecommunications
services.
[0141] Thus, having described several embodiments, it will be recognized by
those of
skill in the art that various modifications, alternative constructions, and
equivalents may be
used without departing from the spirit of the invention. Accordingly, the
above description
should not be taken as limiting the scope of the invention, which is defined
in the following
claims.
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