METHOD AND SYSTEM FOR IMPLEMENTING CHANGES IN A MORTGAGE LOAN INDEX
The present invention is a mortgage method, product, and system that provides for implementing changes in a mortgage loan index, referred to herein as an Interest Rate Index Swap or “Swap”. Customers may swap from their original adjustable loan index (e.g., 3-month LIBOR) to temporary fixed-rate indexes (e.g., 3-year LIBOR) as many times as they deem appropriate during the Swap Window provided the final swap period ends prior to the end of the Swap Window.
1 . A method for changing the index of a loan for a limited period of time during the term of the loan, comprising:
(a) initiating a loan having an Original Loan Index (OLI) with an OLI rate and OLI period, said loan having a Swap Window defined within the term;
(b) until the Swap Window expires, at the end of each OLI period or swap period, optionally
(i) changing the index of the loan to one of a plurality of available swap rates and swap periods, or
(ii) continuing the loan with the Original Loan Index;
(c) upon expiration of the Swap Window, continuing the loan with the Original Loan Index for the remainder of the loan term.
2 . The method of claim 1 wherein step (b)(ii) of continuing the loan with the Original Loan Index further comprises adjusting to the current adjustable OLI rate.
3 . The method of claim 1 wherein step (c) of continuing the loan with the Original Loan Index further comprises adjusting to the current adjustable OLI rate.
4 . The method of claim 1 wherein the Swap Window is available during an Interest Only Period of the loan.
5 . The method of claim 4 wherein the Swap Window begins at the end of the first OLI period.
6 . The method of claim 1 wherein the OLI rate is adjustable.
7 . The method of claim 1 wherein swap rate is fixed.
8 . The method of claim 1 , further comprising a margin added to the OLI rate and the Swap rate.
9 . The method of claim 1 , further comprising imposing a penalty if the index of the loan is changed prior to the end of a current swap period to one of a plurality of available swap rates having a lower interest rate.
10 . A method for changing an Original Loan Index of a loan for a limited period of time during the term of the loan, comprising:
(a) providing a window of time during the term of the loan;
(b) during said window of time, optionally adjusting the loan index one or more times to a fixed rate loan index for a limited period, wherein for any time not within the limited period, the loan reverts to the Original Loan Index;
(c) upon expiration of the window of time, continuing the loan with the Original Loan Index for the remainder of the loan term.
11 . A mortgage product for a loan comprising:
a mortgage term component defining the length of the loan;
an Original Loan Index (OLI) component providing terms and conditions for an adjustable OLI rate and corresponding OLI period applied to the mortgage term;
a swap component providing a plurality of Swap Indexes, each providing terms and conditions for a fixed swap rate and corresponding fixed swap period, wherein the swap component is substituted for the Original Loan Index one or more times during a swap window of time during the mortgage term.
12 . A financial product for a loan comprising:
means for establishing a window of time during the term of the loan, said loan based on an Original Loan Index (OLI) providing terms and conditions for an adjustable OLI rate and corresponding OLI period applied to the term;
means for optionally changing the loan index one or more times, during said window of time, to a fixed rate loan index for a fixed period, wherein for any time not within the fixed period, the loan reverts to the Original Loan Index;
means for continuing the loan with the Original Loan Index for the remainder of the loan term upon expiration of the window of time.
13 . A computer program product, comprising:
a computer storage medium and a computer program code mechanism embedded in the computer storage medium for causing the computer to control the Index associated with a mortgage, the computer program code mechanism comprising:
a first computer code device configured to establish a window of time during the term of the loan, said loan based on an Original Loan Index (OLI) providing terms and conditions for an adjustable OLI rate and corresponding OLI period applied to the term;
a second computer code device configured to optionally change the loan index one or more times, during said window of time, to a fixed rate loan index for a fixed period, wherein for any time not within the fixed period, the loan reverts to the Original Loan Index
a third computer code device configured to continue the loan with the Original Loan Index for the remainder of the loan term upon expiration of the window of time.
14 . A mortgage created according to the steps of: (a) initiating a loan having an Original Loan Index (OLI) with an OLI rate and OLI period, said loan having a Swap Window defined within the term; (b) until the Swap Window expires, at the end of each OLI period or swap period, optionally (i) changing the index of the loan to one of a plurality of available swap rates and swap periods, or (ii) continuing the loan with the Original Loan Index; and (c) upon expiration of the Swap Window, continuing the loan with the Original Loan Index for the remainder of the loan term.