Method of Providing Catastrophic Loss Protection Through a Mortgage

1 . A method of electronically providing catastrophic hazard protection for a real property of an owner by augmenting an enacted mortgage on the real property, comprising:

storing a computer program on a machine-accessible storage medium of at least one computing device; and

executing the computer program by a processor of the at least one computing device to generate the catastrophic hazard protection for the real property, including:

determining, by the processor, an incremental hazard interest rate corresponding to a catastrophe hazard risk cost of the real property, the incremental hazard interest rate corresponding to at least one of: a hazard amortization period, one or more portions of the hazard amortization period, a prime interest rate, a principal balance of the enacted mortgage, the catastrophe hazard risk cost, or a replacement value of the real property;

augmenting a set of mortgage terms of the enacted mortgage to include the incremental hazard interest rate, the hazard amortization period, and a catastrophic hazard protection clause, the set of mortgage terms of the enacted mortgage including a base interest rate, and the catastrophic hazard protection clause including an agreement to provide the owner with one of a reduction in the principal balance or a payment to the owner if a catastrophic hazard occurs resulting in damage to the real property during the hazard amortization period;

receiving, after an enactment of the augmented set of mortgage terms, a payment from the owner towards the augmented, enacted mortgage; and

applying a portion of the payment attributed to the owner towards a hazard interest amount corresponding to the incremental hazard interest rate.

2 . The method of claim 1 , wherein the portion of the payment attributed to the owner applied towards the hazard interest amount is a first portion, and the method further comprises:

applying, using the computer program, a second portion of the payment attributed to the owner towards a base interest amount corresponding to the base interest rate, and

applying, using the computer program, a third portion of the payment attributed to the owner towards the principal balance.

3 . The method of claim 2 , wherein the steps of the method are performed by one or more computing devices corresponding to a bank, a mortgage lender, an insurance company, a mortgage licensee, one or more other business entities, or a combination thereof, and wherein the second portion and the third portion of the payment attributed to the owner are allocated to the bank, the mortgage lender, the insurance company, the mortgage licensee, the one or more other business entities, or the combination thereof.

4 . The method of claim 1 ,

wherein when the catastrophic hazard occurs resulting in damage to the real property, the method further comprises executing at least one of the computer program or another computer program including:

one of generating or receiving information associated with a value of damage corresponding to the damage to the real property,

determining a lesser amount of the principal balance and the value of damage, and

one of:

reducing the principal balance by the lesser amount and providing a revised principal balance to the owner, or

paying the owner the lesser amount; and

wherein when at least one of a group of non-catastrophe hazards occurs resulting in damage to the real property, the group of non-catastrophe hazards including a fire hazard and a flood hazard, and if the owner maintains non-catastrophe hazard protection on the real property, executing the computer program further includes retaining the principal balance.

5 . The method of claim 4 , wherein the damage to the real property comprises damage to a structure of the real property.

6 . The method of claim 4 , further comprising offering, to the owner, a loan corresponding to repair of at least a portion of the damage to the real property.

7 . The method of claim 1 , further comprising at least one of:

securitizing one or more portions of the augmented, enacted mortgage with one or more asset-backed security investors; or

creating a hedging strategy to mitigate an increased financial risk corresponding to the catastrophic hazard protection clause.

8 . The method of claim 1 , wherein the enacted mortgage is one of adjustable-rate mortgage or a fixed-rate mortgage.

9 . The method of claim 1 , further comprising:

obtaining a set of catastrophe hazard risk data corresponding to the real property, including obtaining at least one of a structure type, a structure replacement cost, a structure address, a structure year built, a structure square footage, a structure construction type, a building cost inflation index, or a measure of owner risk retention in loss scenarios; and

determining the catastrophe hazard risk cost of the real property based on the set of catastrophe hazard risk data.

10 . The method of claim 1 , wherein the owner is an applicant for the catastrophic hazard protection.

11 . The method of claim 1 , further comprising:

receiving an indication of an approval to enact the augmented set of mortgage terms, and

enacting the augmented set of mortgage terms after receiving the indication of the approval.

12 . A system for electronically providing catastrophic hazard protection for a real property of an owner by augmenting an enacted mortgage on the real property, comprising:

at least one computing device communicatively coupled to a network and including a machine-accessible storage medium, a processor, and a program stored on the machine-accessible storage medium and executable by the processor to generate the catastrophic hazard protection, including:

obtaining a set of mortgage terms of the enacted mortgage associated with the owner and the real property, the set of mortgage terms including a principal balance and a base interest rate;

determining an incremental hazard interest rate corresponding to a catastrophe hazard risk cost of the real property, the incremental hazard interest rate corresponding to at least one of: a hazard amortization period, one or more portions of the hazard amortization period, a prime interest rate, the principal balance, the catastrophe hazard risk cost, or a replacement value of the real property;

augmenting the set of mortgage terms to include the incremental hazard interest rate, the hazard amortization period, and a catastrophic hazard protection clause, the catastrophic hazard protection clause including an agreement to provide the owner with one of a reduction in the principal balance or a payment if a catastrophic hazard occurs resulting in damage to the real property during the hazard amortization period;

receiving a mortgage payment corresponding to the augmented set of mortgage terms; and

applying a portion of the mortgage payment towards a hazard interest amount corresponding to the incremental hazard interest rate.

13 . The system of claim 12 , wherein the owner is an applicant for the catastrophic hazard protection for the real property.

14 . The system of claim 12 , wherein the portion of the mortgage payment applied towards the hazard interest amount is a first portion, and the mortgage payment further includes a second portion to be applied towards a base interest amount corresponding to the base interest rate, and a third portion to be applied towards the principal balance.

15 . The system of claim 14 , wherein the second portion and the third portion of the mortgage payment are allocated to a bank, a mortgage lender, an insurance company, a mortgage licensee, one or more other business entities, or a combination thereof.

16 . The system of claim 12 , wherein the program is further executable by the processor to:

when the catastrophic hazard occurs resulting in damage to the real property:

one of generate or receive information associated with a value of damage corresponding to the damage to the real property,

determinine a lesser amount of the principal balance and the value of damage, and

one of:

reduce the principal balance by the lesser amount and provide a revised principal balance to the owner, or

pay the owner the lesser amount; and

when at least one of a group of non-catastrophe hazards occurs resulting in damage to the real property, the group of non-catastrophe hazards including a fire hazard and a flood hazard, and if the owner maintains non-catastrophe hazard protection on the real property, retain the principal balance.

17 . The system of claim 16 , wherein the enacted mortgage is one of adjustable-rate mortgage or a fixed-rate mortgage, and wherein the damage to the real property comprises damage to a structure of the real property.

18 . The system of claim 12 , wherein the catastrophe hazard risk cost of the real property is based on a set of catastrophe hazard risk data corresponding to the real property, including at least one of a structure type, a structure replacement cost, a structure address, a structure year built, a structure square footage, a structure construction type, a building cost inflation index, or a measure of owner risk retention in loss scenarios.

19 . The system of claim 12 , wherein the network is accessible using the Internet.

20 . A machine-accessible storage medium comprising:

a program stored thereon for electronically providing a catastrophic hazard protection on a real property of an owner by augmenting an enacted mortgage on the real property, the enacted mortgage including a principal balance and a base interest rate, and the program being executable by a processor to:

determine an incremental hazard interest rate corresponding to a catastrophe hazard risk cost of the real property, the incremental hazard interest rate corresponding to at least one of: a hazard amortization period, one or more portions of the hazard amortization period, a base amortization period of the enacted mortgage, one or more portions of the base amortization period of the enacted mortgage, a prime interest rate, the principal balance of the enacted mortgage, the catastrophe hazard risk cost, or a replacement value of the real property;

augment a set of mortgage terms of the enacted mortgage to include the incremental hazard interest rate, the hazard amortization period, and a catastrophic hazard protection clause, the catastrophic hazard protection clause including an agreement to provide the owner with one of a reduction in the principal balance or a payment to the owner if a catastrophic hazard occurs resulting in damage to the real property during the hazard amortization period;

receive, after an enactment of the augmented set of mortgage terms, a mortgage payment;

apply a first portion of the mortgage payment towards a hazard interest amount corresponding to the incremental hazard interest rate;

apply a second portion of the mortgage payment towards a base interest amount corresponding to the base interest rate; and

apply a third portion of the mortgage payment towards the principal balance.

21 . The machine-accessible storage medium of claim 20 ,

wherein if the catastrophic hazard occurs resulting in damage to a structure of the real property, the program is further executable to:

one of generate or receive information associated with a value of damage corresponding to the damage to the structure of the real property,

determine a lesser amount of the principal balance and the value of damage, and

one of:

reduce the principal balance by the lesser amount and provide a revised principal balance to the owner, or

pay the owner the lesser amount; and

wherein if at least one of a group of non-catastrophe hazards occurs resulting in damage to the structure of the real property, the group of non-catastrophe hazards including a fire hazard and a flood hazard, and if the owner maintains a non-catastrophe hazard insurance policy on the real property, the program is further executable to retain the principal balance.

22 . The machine-accessible storage medium of claim 20 , wherein at least one of:

the owner is an applicant for the catastrophic hazard protection;

the enacted mortgage is one of a fixed rate mortgage or an adjustable rate mortgage;

the catastrophe hazard risk cost of the real property is based on a set of catastrophe hazard risk data corresponding to the real property, including at least one of a structure type, a structure replacement cost, a structure address, a structure year built, a structure square footage, a structure construction type, a building cost inflation index, or a measure of owner risk retention in loss scenarios; or

at least a portion of the program is executable via a website interface.