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July 2nd, 2011

New HAMP tool could lead to more modifications



ApprovedDo you know how to estimate the net present value (NPV) of your home? Have you ever even heard of NPV?

Especially if you’re a struggling homeonwer looking for a loan modification, knowing what your NPV is and how to calculate it is crucial.


According to MakingHomeAffordable.gov, the NPV of your mortgage could be the deciding factor in whether or not you are approved for a loan modification:

If investors are faced with multiple choices for investments, they generally prefer the investment with the higher calculated NPV. When deciding whether to modify a mortgage, investors will choose the option with the higher NPV, either the mortgage modified or left “as is.” For the HAMP program, servicers compare the NPV of the mortgage with a HAMP modification to that of the mortgage left “as is.” If the NPV with the modification is higher than, or within a specified range of, the NPV of the mortgage without the HAMP modification, HAMP servicers are required to provide the HAMP modification for eligible mortgages (subject to investor restrictions.)

Please remember that the result of your mortgageā€™s NPV evaluation is one of several factors that determine whether you qualify for a HAMP modification.

To further assist homeowners in making the NPV calculation for themselves, MakingHomeAffordable.gov created a new website: https://checkmynpv.com.

According to the website:

CheckMyNPV.com can be used by homeowners who have been denied a HAMP modification because of their NPV result. Homeowners can enter the NPV input values listed in the HAMP Non-Approval Notice received from their mortgage servicer, or substitute with estimated NPV input values, to compare the outcome provided by CheckMyNPV.com against that on the Non-Approval Notice.

This tool can also be used by homeowners prior to applying for a HAMP modification to help them better understand the NPV evaluation.

CheckMyNPV.com recommends that after you use this new tool that you save a copy of the evaluation and present it to your mortgage servicer to discuss which loan options are available to you and your family.

If CheckMyNPV.com doesn’t lead more modifications, hopefully it will succeed in helping homeowners better identify why they were denied in the first place.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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