For over a year I’ve known that the crux of the issue for homeowners trying to get a Loan Modification under the federal government’s HAMP program has been the shrouded mystery of the NPV Analysis. The Net Present Value (NPV) calculation is the KEY component of determining whether or not the homeowner gets a trial, and ultimately, a permanent loan modification under the HAMP program. That mystery is now GONE!!
The problem has been that the NPV calculation is a closely guarded secret of the major financial institutions and servicers. If they can keep this calculation a secret, then they can tell homeowners (and even judges) that the homeowner did not qualify for the HAMP modification and no one is the wiser or can prove them wrong; AND that is exactly what they have done for over a year. Here’s the bottom line: Servicers do NOT want to modify because it is simply not as profitable for them as default servicing is. Period. It has NOTHING to do with the homeowner qualifying or not qualifying for HAMP. The problem is enforcement of the HAMP rules and regulations and unless you can prove them wrong with documentation, you’re basically screwed by the secret information (NPV test) that only they possess… until now.
The Department of Treasury is the government entity responsible for determining the formula and the dataset for calculating the NPV on any given mortgage loan asset. The NPV Model formula has been revised several times since the initial launch of the HAMP program and all participants are now currently using NPV Model 3.1 (version) in their calculations.
Here’s a direct quote from the HAMP website from the Treasury, ” A participating servicer in the Home Affordable Modification Program must modify any loan that meets the program’s eligibility criteria if the modification tests “positive” for NPV.” – notice the word “MUST” in that sentence. Here’s a link to that entire report on the HAMP site.
Folks, this is an absolute requirement if a mortgage loan meets the eligibility requirements and the NPV analysis results in a “POSITIVE” then the loan MUST be modified under HAMP. If the Servicer fails to approve the modification under this scenario, they are in BREACH of their Servicer Participation Agreement and this is actionable on the part of the homeowner; meaning you can go on the offense once you have proof that you do qualify and the Servicer has wrongfully and willfully denied you of the HAMP modification.
MBS Analytics HAS ACCESS TO AN NPV MODEL PORTALTO RUN AN ACTUAL NPV LOAN DISPOSITION ANALYSIS FOR ANY HOMEOWNER. Basically they reproduce exactly what the servicer is supposed to do and then hit ‘em between the eyes with, well, let’s just call it a very compelling package and argument to “modify this loan under HAMP or face the consequences.”
Yes, you read that right. So here’s what MBS Analytics does…
- collect ALL of the required information and documentation to ascertain the data and information that needs to be inputted
- calculate the borrower’s actual monthly income and expenses
- calculate the proper monthly amounts for taxes and insurance
- run an AVM (short for automated appraisal) just like the servicer does to determine a FMV (Fair Market Value) for the property
- run a COMPLETE NPV ANALYSIS which tests for HAMP eligibility, NPV Positive or Negative, New Monthly Payment under HAMP and eligibility for Foreclosure Alternatives such as Short Sale, Deed in Lieu and non-HAMP modification alternatives
- compile the complete package in a very specific order and format
- draft a cover letter with a summary of the NPV findings and the Loan Disposition Analysis and which also states their legal position on the Homeowner’s qualification for a HAMP modification
- attach documenation to support the position and documentation which details the Servicer’s OBLIGATION to comply
- cover letter makes a demand to comply and to modify according to the HAMP program and in line with the calculations for the new monthly payment under HAMP
- send all of this certified mail to the servicer
Call MBS Analytics today if you are interested or have any questions or want to get started.
