Article submitted by: 911 Foreclosure - Loan Modification Advice
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With millions of homeowners either in, or desperately trying to avoid foreclosure, it would seem reasonable that lenders would be eager to modify the loans on their books before they end up with another foreclosure.
You would think.
But on July 28, the Secretary of the U.S. Treasury had a meeting with representatives of the top 25 mortgage servicing companies along with representatives of ACORN -the Association of Community Organizations for Reform Now, Neighborworks, the Neighborhood Assistance Corporation of America and the National Fair Housing Alliance to discuss the abysmal rate at which modifications are taking place.
Back in February, the Obama administration unveiled their foreclosure prevention plan for homeowners in distress. It was said that 4 million homeowners could be helped through the program.
With only 200,000 home being modified since February, and millions currently in foreclosure; one can barely call this progress ratio a success.
With all the hype in the media, one of the main things that they aren’t telling the public is why the loans aren’t getting modified. Since the lenders are keeping the reasons behind closed doors, no one “officially” knows the details. What can be seen from all the complaints and cries for help is that more homes are being refused loan modification than approved. This is not based on hard fact, but rather on an educated guess.
Why are loan modifications so hard to come by?
The answer is a little factor called Net Present Value.
On September 15, 2008, the Mortgage Bankers Association held a regulatory compliance conference. At the conference, a presentation was made to the members of the MBA discussing
Net Present Value analysis and Loan Modifications. The primary focus was onhow mortgage bankers and servicers should use Net Present Value analysis to ascertain what is in the best interest of investors?.
Did you catch that? What is in the best interest of the investors not whats in the best interest of the Home Owners..
Boiling it down, Net Present Value or NPV considers the value of a dollar today and then compares it to the same dollar in the future. NPV is used to calculate the investors’ risk by comparing the value of the mortgage modified verse the amount gain in foreclosure.
Plainly speaking, even though your paperwork may be perfectly filled out and your application looks perfect on paper; you mortgage can still be denied a modification. Always keep in mind that the NPV is the underlying concern to the lender.Fair? Probably not. But it is the reality of the game. And unfortunately, there is not all that much you can do about it except for this?
If you are speaking to an attorney or other loan modification expert and they say something like We have handled thousands of loan modifications and we’ll be able to get one for you, run like hell.
Truthfully, no company or attorney has thousands of modification under their belt. If you are seeking “Expert Advice” ask them if they can review your NPV and how it calculates into their modification. 9 out of 10 “experts” won’t have an answer for you. And then you’ll instantly know you’re not dealing with a so called ”expert”.
