Net Present Value, NPV Denials- Disputing Loan Modifications

Subscribe to Rss Feed

Net Present Value or NPV Denials

NPV Denials Does Not Mean The End of the Road

Video Transcript:

Hi I’m Michael Gaddis.

I’d like to take a few moments today to discuss loan modification denials.  One of the main reasons that people are given on why their loan modification has failed is called an NPV or net present value. Net present value is basically a computer program that tells the investor whether you’re worth more to modify or to foreclose on. Now, there are a lot of factors that go into a net present value analysis. However, there are some heavyweight factors. One of those factors is income and another factor is how much your house is worth.  Obviously, loan modifications are about risk of loss to the investor. As the investor stands to lose more and more money through a foreclosure, the incentive for the investor to work with the homeowner to help them achieve a modification is greater. As a result, increasing property values have been causing more and more NPV denials because the financial loss to the investor is becoming less and less.  Now home value is not the only reason a that could be affecting the result to the NPV. There are lots of different values and fields in the NPV analysis that are going to be making a final determination of whether homeowners are going to obtain a loan modification.

However, home value is a heavyweight factor as is income as is a numerous other issues which could be identified as being input into the computer incorrectly or that were arm you know a result of a bad under any so if you have an issue with an NPV, the first thing you want to do is not panic you don’t want to necessarily give up and say oh I guess I’ve lost my house I failed NPV.  What you want to do is get a second opinion you want to have somebody who knows what they’re talking about.  Read through your NPV data sheet to see if there’s any issues with it beyond what you can see. Because, believe it or not, every field in there has a reason for being there or wouldn’t be there.  It’s very important that all of those fields are accurate so if you have recently received a net present value denial or failure, you might want to give someone like myself or somebody else to call that can give you a solid basis for a second opinion on whether or not you know it’s to your advantage to either appeal or resubmit a loan modification package.

Contact The Law Offices of Michael Gaddis today for Loan Modification Help

See Loan Modification Success Stories

You can reach me at my Carlsbad office Monday through Friday at 760.692.5950 Please mention this video when you call. Best of luck.

Loan Modification Denial: Net Present Value NPV Results

Subscribe to Rss Feed

One of the most frequent reasons for denying a loan modification application is net present value NPV.  Net present value NPV is a computer program that analyzes numerous factors and determines whether the proposed loan modification is in the best interests of the investor that owns the loan.  In other words, if the proposed terms of the loan modification are such that the investor would lose less money by foreclosing on a homeowner the loan modification application will be fail net present value NPV and the application will be denied.  If the proposed terms of the loan modification are such that the investor will less money by modifying the loan modification application will be approved and the homeowner will be placed on a trial modification.

If a homeowner is denied a loan modification based upon net present value NPV failure the lender will typically send a denial letter to the homeowner along with a NPV Input Values Chart (“NPV Chart”).  The net present value NPV Chart is an extremely important document that sets forth the fields and values used by the lender in analyzing your loan modification application.  A homeowner who receives a net present value NPV denial has 30 days from the date the homeowner receives the denial letter to file an appeal of the net present value NPV test based on an error(s) in the net present value NPV Chart.

For a professional that knows how to read and interpret the data on the net present value NPV Chart the information is extremely valuable.  This data is a window into how the bank interpreted a homeowner’s loan modification application and what values they used for fields such as credit score, property value, property valuation type, data collection date, etc.  The net present value NPV chart typically has around 34 fields populated with data used in the net present value NPV analysis.  The fields include data collection date, imminent default flag, investor code, unpaid principal balance at origination , first payment date at origination, product at origination, next adjustable rate mortgage (ARM) reset Rate, unpaid principal balance before modification, principal and interest payment before modification, monthly property tax payment, monthly hazard insurance payment, proposed principal and interest payment, proposed amortization term, proposed interest rate, proposed principal reduction, proposed principal deferment, etc.  Every field is equally important in analyzing whether or not the net present value NPV denial is accurate.

Appealing net present value NPV results can be difficult for a homeowner because lenders presume that the data collection and net present value NPV are correct.  Additionally, the lenders’ internal appeal process is typically not run efficiently.  Usually, a homeowner can only communicate through a CRM and not the individual at the lender that input the data into the net present value NPV test.  However, if a homeowner believes that an error exists on their net present value NPV results time is of the essence.  The homeowner should either file for an appeal or consult with someone familiar with loan modification  underwriting guidelines and net present value NPV tests.

It is not uncommon for a net present value NPV Chart to have one or more errors in it.  Whether or not the errors are material enough to have changed the final decision is a more difficult analysis.  Some errors are trivial in nature while others are more substantive.  Either way it is important to determine the accuracy of the values used to populate the net present value NPV fields.

The best advice is to find a competent 3rd party (not yourself and not the lender) and get an expert opinion on the net present value NPV denial.