Feldman Law Center
Many homeowners wonder what factors determine whether or not mortgage servicers agree to modify their loans. One of the most important parts of the process is also the most inexplicable, a computer evaluation known as the Net Present Value Test.
A complex computer model, the NPV test is administered by mortgage servicers to ascertain a borrower’s eligibility for the current federal loan modification program. The test works by weighing two opposite scenarios, modification and foreclosure, and determining which would be more profitable for the lender. If the answer comes back as “foreclosure,” then the lender is under no obligation to refinance the loan in question. Lately, many analysts and homeowner advocates have questioned the processes and reliability of the NPV, citing a lack of information about how it works as well as many questionable results.
For example, in June, an 83-year old widow in Illinois applied for a loan modification under President Obama’s Making Home Affordable program. Due to the unknown processes of the NPV Test, her loan modification was denied by CitiMortgage, and she was left with no recourse. There are many other instances of similar anecdotal evidence, where servicers entered incorrect information or made other inadvertent errors; however, because the program process is not available to the public, the borrowers had no way to challenge or appeal the mortgage servicer’s loan modification denial. In situations such as these, the services of a skilled loan modification attorney could make the difference between rectifying a bank’s error and losing your home.
On the whole, this test has produced many fewer modifications than expected, and the veil of secrecy surrounding it makes it virtually impossible to pinpoint or discuss possible weaknesses or inaccuracies. The government has not yet released the exact components of the program, which it calls an “objective test,” though the Treasury Department says that it is striving towards fuller disclosure of the NPV process.
If you are facing the possibility of foreclosure, you need someone to fight for your best interest. In its current incarnation, the NPV evaluation leaves homeowners entirely at the mercy of mortgage servicers who may or may not enter information correctly or take everything into account. In the case of the 83-year old Illinois widow, a mortgage broker who offered his assistance pro bono was allowed access to the actual numbers plugged in to the NPV evaluation of her loan modification request. He insisted that CitiMortgage had grossly inflated the value of the woman’s home, skewing the data towards foreclosure in the hopes of turning a profit. With his assistance, the woman was able to reduce her mortgage payments and stay in her home.
Fortunately, this example ended happily, but that is not always the case. Taking on lenders and mortgage servicers will always be a challenge, but, with the help of a California loan modification attorney, it no longer needs to be an insurmountable one. If your loan modification has been denied based on an NPV evaluation or you just want a representative on your side to ensure your rights are being upheld, a loan modification attorney may be able to provide a solution. Why risk losing your home due to a bank’s mistakes? Contact a California loan modification attorney today.
Visit us at http://www.feldmanlawcenter.com or call 800-588-0425.
Legal Disclaimer
The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.