If you have been denied a loan modification and the reason given is Negative NPV Result, there are some important actions you can take to legally fight back. Most homeowners have no idea what NPV means or how it affects their chances of getting a loan mod. The government program has set up standard procedures that lenders must follow and standard options available to borrowers who find themselves up against the NPV calculation.
Loan Modification-Negative NPV Result Information
When a borrower is not approved for a loan workout because the transaction is NPV Negative, the borrower will have 30 calendar days from the date of the Non-Approval Notice to submit written evidence to the servicer that one or more of the NPV input values is inaccurate. If the borrower wishes to dispute more than one NPV input, the written evidence for each input being disputed must be provided to the servicer at the same time. If the borrower identifies material inaccuracies in the NPV input values, the servicer may not conduct a foreclosure sale until the inaccuracies are reconciled.
If the evidence submitted by the borrower is valid and material to the NPV outcome, the servicer must perform the NPV calcualation with the corrected input values.
HOW TO DISPUTE NPV
In the event a borrower disputes the property value input as well as other NPV Data Input Fields and Values, the servicer may elect to validate the other disputed NPV Data Input Fields and Values and perform the NPV re-evaluation changing any other validated inputs while holding the original property value constant. If this re-evaluation renders a positive NPV result, the servicer may APPROVE the borrower without performing an NPV re-evaluation with a new property value or obtaining a new appraisal. If this re-evaluation renders a negative NPV result, the servicer must perform the preliminary NPV re-evaluation with the borrower’s estimate of property value.
If a borrower submits written evidence for some but not all of the NPV inputs that the borrower is disputing, the service must notify the borrower promptly that all the necessary written evidence has not been received and that it must be received within 30 calendar days. This notification need not be in writing but must be documented, the servicer may extend the 30 calendar day dispute period to allow the borrower time to send the missing evidence.
The number one reason for NPV denial on a loan modification is that the lender has a higher current market value for the property. You can dispute their valuation by providing an appraisal, CMA or BPO – ask your local Realtor to help you with this. When trying for a loan mod, the lower your property value, the better your chances are!
Another common reason for NPV denial is due to the borrower not showing enough gross monthly income on their application. If the income is too low, then the mortgage cannot be modified within the Waterfall
Method, and the bank will determine that foreclosure is a better option. How can you know ahead of time just how much income you need to qualify? You can avoid mistakes and verify your income, expenses and assets will work by using the loan modification calculator. This powerful tool will instantly compute and display whether your budget is passing or failing, and you can make the necessary adjustments before sending it in for review.
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