2015-08-06 Meeting notes
- Dennis Wisnosky
- Michael
- Lynn Calahan [X] (Unlicensed)
Date
Attendees
Decisions:
Contracts – Offers – Products
- there is general agreement that this is a good distinction
- there is a continuum that needs to be taken into account between
- off the shelf product offers that are fixed, just need to be signed
- fully bespoke, one off created from scratch contracts, for which there is not really a useful offer or product per se that is distinct from the contract
Contract Terms
- we agree that there is a distinction between the force of what is required, permitted, forbidden in a contract term vs. the evidence of that in the form of a document.
- Use the term “ContractTerm” for the real thing, and it is ‘evidencedBy’ a document.
Obligations
- Distinguish between payments
- repay the principle
- pay for interest, taxes, fees etc
Most of this has already been reflected in the models being developed.
See: LoanOverview-V4-6Aug15.pdf
Discussion items
1 Loans Technical Meeting – 2015-08-6
1.1 Summary
Contracts – Offers – Products
1. general agreement that this is a good distinction
2. continuum between
a. off the shelf product offers that are fixed, just need to be signed
b. fully bespoke, one off created from scratch contracts, for which there is not really a useful offer or product per se that is distinct from the contract
3. Still some work to do on nailing the relationship between a ‘product’ which is a marketing description and financial instruments in general, there are so many variations.
Contract Terms
1. agreement that there is a distinction between the force of what is required, permitted, forbidden in a contract term vs. the evidence of that in the form of a document.
2. Use the term “ContractTerm” for the real thing, and it is ‘evidencedBy’ a document.
Obligations
1. Distinguish between payments
a. repay the principle
b. pay for interest, taxes, fees etc
1.2 Raw Notes
Is there distinction between loan offefr
Max: Loan facility, the loan is the instantiation of the loan facility.
Lynn: intermediate step, commitment to offer, e.g. rate lock,
MaxG: uncommitted offers, at some point bank will make offer than you can take up, e.g. pay up not or forget it. Lines/credit cards work differently. Bank creatiung loan facility, bank says what terms are, you can draw down sums, you might be able to draw down again, or not. Lots of ways this can work.
MaxG: the simple product, e.g. given to a retail lender, usually not have long period to exercise offer. For house borrowing, more complex terms.
JimC: I like distinction between product and offer, product is static description of financial instrument, offer is pricing, market conditions, borrower & collateral.
Max: the product as such is a marketing concept.
JimC: product is label that describes a collection of characteristics. Term of instrument, is it adjustable or fixed-rate, etc.
Max: loan contract is an instantiation of a loan offer, but not good to think of offer as template. Many negotiations before contract is signed. Range of bespoke vs. boilerplate.
Max: different degrees of detail in product template, eg. high level loan we talk about security, up for grabs. Different degrees.
MU: BUT: in fibo, an instrument is a WrittenContract.
MikeB: instrument in general, includes securities, derivitives etc. When buy debt security, you become a small part of the lender. Buy/sell debt security separate from loan as a product.
MU: shere of GOOG is like a product.
Max: dangerous, better look .. instrument as sum of all properties, vs. the product which is the marketing properties of a product.
MikeB: with share certification, it already exists, it shared a contract, what changes is who is the holder. So some insrumnts are contreact, buy one just
MikeB: if you are lender on loan, can sell your side of loan to others, e.g. mortgage-backed security.
Lynn: notion of pooling, for different purposes.
Max: can turn loan into security (this is origination process). The securitization process describes the loan.
LC: we do have paper for a specific loan, a mortgage is a security instrument
Max: one important point is we are talking about 2 thinkgs. Collaateral important (literally happening at same time) really is a side contrace, the asset. The properties of the loan are very well contain, and many other things that can be looked at separately.
MU: terms (as content) vs. obligations
MikeB: “ContractTerm” as defined inlegacy FIBO, one in published green. One is in abstract sense. Separately and not in the published FIBO is where it is written down.
LC: can consideration be part of a term?
Max: yes, absolutely
MU: so we don’t have to model the document separately?
Lynn: maybe we need to have evidence of the terms, which are in the contract itself.
Max: agreed
MikeB: we did not think we would need this, but we have it, so we can use it.
TechnicalMeetingDeck08062015.pptx