NPV Test

[nworbirol]

Good Morning -

Does anyone have insight into the NPV test the banks are using?

I ran my numbers through FDIC's mod-in-a-box and fail that test by about $25k, using only the first mortgage.

I know the banks are keeping all criteria as hushed as they can - just wondering if anyone has any insight on this.

The mortgage is serviced by Wells Fargo; owned by BOA.

I also have a $42k equity line held by Wells Fargo.

I don't think that model includes any govt. subsidy for taking the payment from 38% to 31% - but I'm not sure. Nor does it include the equity line.

I'm asking because according to the treasury website, if the mortgage passes the NPV test BOA (as a recipient of TARP funding and having agreed to participate in HAMP) MUST modify according to HAMP. If it fails, they MAY.

To get the payment to 31% of current income (husband lost job in December) would require principal forebearance - which banks don't seem to be willing to do.

There are variables that can be adjusted to get the model to pass - like home value (gawd only knows what they're using), # of months to foreclose (I'll drag it out as long as I can), and cure rate (which the model sets at 15% - but in my case would be 0% - why wouldn't I fix it if I could instead of moving 3 kids to who knows where?).

My current situation: applied for modification Feb; denied June 24. Reapplied June 30. Faxed in all documents July 10. First call after that - they have all needed documents. Second call - husband didn't sign financial statement (my fault), fax again. Third call - they need most recent pay stubs from me. Faxed it - there was ony one more current than what I'd already sent. Called exec. office yesterday. It's all my fault, I was told, because I have to send the documents all together. Plus if the income hasn't changed there's no reason to expect a different outcome, despite the fact that we've lowered spending and cut down expense as much as we can.

It's not looking good for us.

Suggestions?

Thanks.

Lori

[MAXIE19]

Unless an insider, no one really knows. An ET supervisor told me yesterday that contrary to everyone's fascination with deficits and surpluses, it is really not about the expenses.....,it does not matter what your expenses are if they cannot first get there with the income. That income has to first pass the NPV test of affordability.

[chasepmt2hot-firefighter]

Can anyone direct me back to the NPV link that was posted months ago? The one that had example data entered. I have it somewhere documented but it could take awhile, if someone has it handy, I'd greatly appreciate it.

[Evan Bedard]

Here you go:

NVP test guidelines
https://www.hmpadmin.com/portal/docs/npvoverview.pdf

[Jule215]

I have a model where you can plug your numbers in, that I posted a few months ago...It's on another computer right now, but if you'll look back through my posts, I think you can find the link...If not, when I get my other computer back, I'll repost it.

[nworbirol]

Here's the link for the FDIC model:

FDIC: FDIC Loan Modification Program Guide – "Mod in a Box"

You'll see it. (Net Present Value Worksheet)

I ran through it again. If I use our GROSS income, not the NET income - we pass, according to that model.

Wouldn't you think that's what they'd use?

If anyone has another model, I'd love to see it.

Lori

[Hopefull2009]

An ET supervisor told me yesterday that contrary to everyone's fascination with deficits and surpluses, it is really not about the expenses.....,it does not matter what your expenses are if they cannot first get there with the income.

This is actually what Aurora said also.

[nathanb]

Neworbirol,

I have wondered the same question. When I run the NPV test I pass, but WF has denied me 2 times and I am pending my 3^rd review for HAMP. I have asked a million times if I passed or failed the NPV…but know one even knows what it is. I do know the guidelines on the treasury’s site say if a servicer has a large enough book they can use their own data. WF being so big probably would fall under this and it could be the NPV they are using is totally different then what we have-just speculation though. When I pass the NPV it requires a forbearance as well and WF has told me they wont do this.

Agreed, on the monthly expenses…that is not what they are looking for on HAMP other than looking for a small surplus. My understanding is strictly gross income vs mortgage, insurance, tax, HOA. Also, a tip is that decreasing your homeowners insurance or disputing your property tax can make a big effect in qualifying. I am not a mathematician but saving $50 per month on tax or insurance would equate to about 150 of extra income per month. I am an insurance agent and most the time you can get some real saving by stripping off all the extra coverage from your policy or increasing your deductible (you can go as high as 5,000 to 10,000).

[ugh_2009]

Who runs the test, the servicer or the investor?

[nworbirol]

Good Question UGH. Who does run the test.

In my case the servicer and holder of the second lien is Wells Fargo. The owner is BOA.

And if they do foreclose, does WF collect all/someor none of the 2nd?

I have no way to know what kind of value they're putting in for the house - if they put in something too high then I fail. But not be enough to cover the WF 2nd.

Has anyone ever tried going to the owner instead of the servicer? Will they talk to you? Not that BOA is doing anything better than WF.

I appreciate the discussion here. Hope I haven't spread around any additional angst.

Lori

[nathanb]

WF did a BPO (broker price opinion) for my value. They told me what they are useing (by accident). If they have declined you for HAMP once, then this was probably done. Call loss mitigation...i tend to find they are good at giving either wrong information, or information they are not suposed to.

[JenMBS]

Could someone explain what the NPV test is wanting on line 31 "Current Value" please? I am thinking home value but when I put my home value in which is higher then what is owed on my loan it doesn't pass the test. It passes if it is lower then what is owed on the loan...I don't understand. Thanks

[MAXIE19]

Goes to whether you are underwater or not, i.e. does your home value exceed your outstanding mortgage balance?. If you are not underwater and have at least 20% equity in the value of your home, it is more likely than not that the bank can recoup its investment through a foreclosure and so will be less likely to modify you as compared to when you are underwater. This is why you pass the NPV test with a lower home value and fail with a higher home value. For purposes of passing the NPV test, lower home values are better.

[JenMBS]

OK...No we are not underwater at all and we do have 20% equity in our home. We are current on payments and have never been late. All we want to do is lower our payments to the 31% due to job lost and making a lot less with the new job then we were when we purchased.

[MAXIE19]

The best way to find out what your bank's response would be is to either submit a mod application or go through NACA. You can read up on the other threads as to how to go about doing this.

[JenMBS]

Turned in all paperwork in April and have been following up since. Bank has not even called, I have been calling them. Still no answer with someone to help us and they told us last week that someone will now call us in 7 days....it's past 7 days so will be calling them again. I am tired of the wait and be nice game and getting more worried.

Thanks for your answers.

[Questions]

I know this isn't etched in stone for us applying for the Making Home Affordable Plan but I'm wondering what people are entering under current home value for their 1st mortgage that they are trying to get modified? I was putting the actual appx value of my home but that's not accurate to put there since I have a 2nd loan. I have one of those 80/20 loans.

Any help would be wonderful.

Thanks everyone!

[ugh_2009]

It's the current estimated house value, what it would sell for in today's market. It has no relation to how much you owe (1st and 2nd loans). Typically, the servicer will order a BPO (Broker Price Opinion) to determine the property value.

[Questions]

Hmm, well, if I put in the appx actual value of my home, I fail but that's because it's worth more than my 1st mortgage. But that is because I also have a second mortgage that was set up at the same time, my 1st was when I closed. Do you all still think I should put the actual value?

[ugh_2009]

Well, there isn't a way around this; It's how the HAMP program works. How much more is your estimated value than the 1st? Where are you getting the estimated value from (i.e. Zillow)?

[Questions]

I am just using an amount that my real estate agent gave me a few months back so it might be lower now. I can't find any estimates on zillow. I believe it's quite a bit more. I would think they would take that into consideration though since I have a second. It will not be good for me if this is how they calculate NPV. I'm remaining positive though, have to keep praying that this will all work out in the end.

[mel239]

I purchased a house that was empty for 2yrs-the owner had committed suicide in the house-it was a HUD house and was appraised in May for 260,000-got refinanced in October to pay off some bills.I originally Paid 207,000 and my refinance was for 247,000-they appraised it at 320,000-this was mere months later-I think it was too show 20% down-I have also discovered many problems with the loan papers and will get a forensic audit-I hope to get some leverage for a good mod

[james11]

Please help I am trying to do my npv to send into my lender but I dont know where to find some of these figures like default rate and other specifics to my area, any help would be much appreciated!!!

[michelle.m]

Got denied HAMP from GMAC. The reason is they say my house is worth $420k, when in reality its closer to $340k. Is there anyway to to get my own appraisal? They did offer a 6 month forbearance.

[davephx]

Originally Posted by james11

Please help I am trying to do my npv to send into my lender but I dont know where to find some of these figures like default rate and other specifics to my area, any help would be much appreciated!!!

It is a secret and its on revision 3

You may be using the mod in a box site but that is not what is being used for HAMP. Those are old rules for other purposes.