Our Ratchet MortgageTM product offers a significant advantage to the borrower over an Adjustable Rate Mortgage (ARM) -- the RMTM product's interest rate can only go down, in accordance with a decline in a pre-determined index, but unlike an ARM, the RMTM product's interest rate will not increase if the index later rises. Our RMTM product offers all of the advantages of a fixed-rate mortgage in a rising interest-rate environment and all of the advantages of an ARM in a declining-rate environment. Each RMTM rate decline is automatic and costless, thereby saving the homeowner the substantial transaction costs associated with refinancing a fixed-rate mortgage. The RMTM concept can be extended to a broad range of Ratchet LoansTM, such as a Ratchet Student LoanTM, or other types of Ratchet FinancingsTM.
The key to the financial success of our RMTM product is its linkage to a comparable ratcheting source of funding, such as a Ratchet BondTM (RBTM)or a Ratchet Pass-ThruTM (RPTTM). That is, as the RMTM's rate steps down, the effective rate of interest on the RBTM or the RPTTM declines accordingly, thereby preserving the lender's interest-rate spread while passing all interest-rate risk through to investors in the RBsTM or RPTsTM funding the RMs TM.
The RMTM concept's inventors, Mr. Bert Ely and Dr. Andrew Kalotay, have applied for a patent for their Ratchet MortgageTM concept, U.S. Patent and Trademark Office application No. 11/356,393. The application was published on August 17, 2006, as Publication No. 20060184450 and can be viewed at www.uspto.gov. On the PTO homepage, click on Search. On the next page, click on Publication Number Search, enter 20060184450, and then click on that same number on the following page. Foreign patent protection also has been applied for.