I don't believe that step 4 which states that the servicer "MUST" forbear principal by setting up a balloon payment has been revised to "may" forbear balance. I think the banks are not following the guidelines. They can only deny the modification if principal forbearance is needed AND the NPV test is negative. I think that is the reason they used the word "may", "may" doesn't mean it is optional, that term "may" is used because there is one situation where principal forbearance could not be used---> NPV test is negative.
Originally Posted by davephx
Here are the guidelines dated 8/28/09
Step 5. Regardless of whether a modification is pursued, you must
maintain detailed documentation of the base NPV model used,
including all NPV inputs and assumptions, as well as the NPV
results. You must save the results file to your computer.
Following is a brief explanation of each field of the NPV test
HAMP Servicer ID
A unique identifier assigned to each servicer that is
participating in HAMP. This identifier will match the
information provided on the input file.
Servicer Loan Number
A unique identifier assigned by the servicer that is
associated with a loan secured by a property. This identifier
will match the information provided on the input file.
Indicates whether the modification submitted appears to follow
the HAMP waterfall guidelines, outlined in
available on www.HMPadmin.com.
De Minimis Test
Indicates whether the proposed modification meets the “de
minimis” test — that is, it would result in at least a 6 percent
reduction in the borrower’s monthly payment.
Flags cases where the loan, after modification, is NPV
negative and the amount forborne makes the interest-bearing
unpaid principal balance less than the market value of the
Value No Mod
The net present value of the loan without a modification.
The net present value of the loan with a modification.
The result of the NPV test, either
Positive or Negative.
NPV Run Successful
Indicates whether the loan was able to run through the base
NPV model, including whether problems with the
data submitted prevent a full NPV calculation.
If the response is Y, then the loan was run through
the base NPV model successfully.
If the loan does not run through the base NPV model
successfully due to a data error or some other issue,
the field will be populated with an N, followed by a
code(s) indicating the error. For example: N: 1; 5; d.
The list of error codes and error descriptions is
provided in the Base NPV Model User Guide and
FAQs documentation that is located in the secure
servicer area of the HAMP Web site
. You must correct the data
field(s) and resubmit the loan(s) to the NPV test.
The date on which the NPV test was run.
The version of the base NPV model software tool that was
used in the assessment.
Freddie PMMS Rate
The Freddie PMMS Rate that was used in the assessment.