Abstract: An innovative system and method for providing financial protection to predefined borrowers during critical periods. The system includes a financial product that includes multiple insurance products that provide financial protection against predefined insurable risks without additional cost to each predefined borrower. The financial product also includes a critical period protection premium that is paid by a private mortgage insurer to reduce the risks associated with possible default by the predefined borrower. The critical period protection premium is used to insure the predefined borrower against at least one predefined insurable risks that occur during critical periods. The financial product also includes a coverage time period and a benefit period. The coverage time period is defined as a period when the typical predefined borrower is most vulnerable to delinquency because of the predefined insurable risk.

Abstract: A system and method of the invention uses an inventive contract structure to fund credit enhancements for borrowers and other community development activities. The system includes at least one collection component and a processing company. The collection component obtains insurance policy information from eligible borrowers. The processing company creates a special purpose vehicle for holding a plurality of life insurance contracts, where each of the plurality of life insurance contracts is based on the insurance policy information from at least one eligible borrower. The plurality of life insurance contracts serve as collateral for a plurality of financial instruments created by the special purpose vehicle. The special purpose vehicle also uses a residual value from the life insurance contracts to pay, for example, the premiums required by the life insurance contracts and as collateral for the plurality of the financial instruments.