What to Do When Your Servicer Denies A HAMP Mod Because They Re-Ran the NPV Test
1. Ask when they ran it the first time.
- The NPV test should be run before the HAMP trial plan offer is extended. See HAMP Sup. Dir. 09-01, p.4, HAMP Checklist for Verified Trial Period Plans, p.7, FAQ 2314.
- Check what version of the Net Present Value test was in effect at that time. The version used the first time they run the NPV test must be used for any subsequent runs of the NPV test. See HAMP FAQ 1808, 1809.
2. Ask why they re-ran the test.
- HAMP only provides for the NPV test to be run twice: when there is a verbal request for a modification and when verified income is submitted. See HAMP FAQ 2314.
- Servicers do not need to update property valuations or re-run the NPV test to account for updated property valuations. See HAMP FAQ 2100, Sup. Dir. 09-07, p.6.
- Servicers need not rerun NPV tests if escrow amounts, including tax and insurance payments, change. See HAMP FAQ 2209.
- Servicers should not re-run the NPV test when approving the final, permanent modification; they should only re-visit the waterfall to determine the final payment, principal and forbearance amounts. See HAMP FAQ 2314.
- Servicers cannot use the NPV test for other purposes, other than those specified in their contracts-which should mean the NPV test could not be rerun simply because an investor asks. FAQ 1812.
3. Ask what version of the test they used and what inputs they held constant.
- The servicer can only change the following inputs: association fees, insurance, taxes, income, and the post-modification terms determined by the income (the unpaid principal balance, monthly payment, principal forbearance amount, amortization term, and interest rate after modification). See HAMP FAQ 1810. Note that a change in the association fees, insurance, or taxes are not a reason to re-run the NPV test. See HAMP FAQ 2209.
- When the servicer re-runs the NPV test, they must use the same version of the NPV test. See HAMP FAQ 1808, 1809.
4. If the NPV test was run with inaccurate inputs, ask them to run it again.
- Servicers must re-run the test if the homeowner identifies inaccuracies in the inputs the servicer used, and the correct inputs would change the NPV result. See HAMP Sup. Dir. 09-08, p. 3.
5. Call Howard Law, P.C. at 1-800-872-5925 for assistance with your loan modification today. We have helped many homeowners who have been previously rejected by their lenders for a HAMP or other loan modification.
- July/August 2010, NCLC Reports Bankruptcy and Foreclosures Edition