Theme: Homeowners Across The Nation Are Being Denied. What the Lenders Aren't Saying.
August 19, 2009Article submitted by: 911 Foreclosure - Loan Modification Advice
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With the increased pressure from the media to help the millions in or close to foreclosure, it would make common sense that the lenders would be more apt to modify their outstanding borrowers
You would think.
On July 28th, the U.S Treasury Department held a meeting with the heads of the top 25 mortgage servicing companies. This meeting was accompanied by ACORN – the Association of Community Organizations for Reform Now, Neighborworks – the Neighborhood Assistance Corporation of America and the National Fair Housing Alliance to try and fix the unstable rate in which loan modification are being approved.
During the push to resolve the foreclosure epidemic, the Obama administration released in February their foreclosure prevention plan for distressed homeowners.
With only 200,000 home being modified since February, and millions currently in foreclosure; one can barely call this progress ratio a success.
What is not being discussed in the media is the reason that so many modifications are being denied. There’s not much information about mortgage modification denials. 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.
So why are modifications so difficult to come by?
The answer is a little factor called Net Present Value.
On September 15th of last year, the Mortgage Bankers Association held a compliance conference to discuss:
Net Present Value analysis and Loan Modifications. The focus of NPV and Loan Modifications was on how mortgage servicers and banks should utilize the Net Present value to assess what’s best for the investor.
Did you catch that? ?What is in the best interest of investors?. They did not say What is in the best interest of homeowners?.
Without going too deep, Net Present Value or NPV balances the difference between the value of a dollar today to the value of the same dollar in the distant future. The decision on whether investors would be better off modifying your current mortgage or foreclosing on your mortgage is calculated from NPV figures.
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.
In all honesty, there isn’t a company or attorney that has thousands of modifications on their record. I you are seeking help with your modification, ask them about Net Present Value. If they can’t answer you, then obviously you’re seeking the wrong help.