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With foreclosures at an all-time high and home values still continuing to drop, close to half of all U.S. homeowners now either owe more on their home than its current value, or are in arrears on their mortgage payments by at least one month.
And while many of these individuals are scrambling for solutions, all solutions starts with one number: your home's NPV, or Net Present Value.
In order to negotiate a loan modification with your lender, you'll need to know the exact NPV of your home.
Not the current estimated market value, based on other home sales in you area. Not the current assessed worth. But the NPV, pure and clear-cut.
"Banks will deal with you much differently when you have the outcome of your NPV Test," said David Goldberg of Rebound Credit Solutions, which has developed a proven self-guided program to aid consumers in negotiating more favorable and equitable mortgage modifications with their lenders. "It's the most important part of any loan modification."
So what exactly is the NPV, you inquire? And how do you determine this figure for your home?
While many loan modification products and negotiators refer to this home worth as the REST Report, the NPV is more accurate, as it utilizes a version of software used by major banks and servicers.
But not only that, but the NPV is a loan disposition system which runs proprietary algorithms, accesses several property valuation databases, and was developed in concert with related guidelines used by lenders and servicers when determining loan modification eligibility.
In short, an NPV test runs the most up-to-date analytics, therefore producing the highest results.
"Armed with this information, homeowners can then present the precise value of their home to their lender, and then begin negotiating with confidence," added Goldberg.
But first, a struggling homeowner needs an NPV to verify if they'll qualify for a HAMP loan modification.
HAMP is the Federal Home Affordable Modification Program, which is aimed at helping millions of homeowners at risk of foreclosure by working together with their lenders to lower monthly mortgage payments. This system is now looked upon as the industry standard practice for lenders to analyze potential modification applicants.
When this is determined, and if a homeowner does in fact qualify, then it’s simply a matter of proceeding with this HAMP restructuring.
But if a homeowner does not meet the criteria for HAMP, then an “in-house” modification can sometimes be worked out between a homeowner and their lender.
In this instance, a homeowner must be armed with the NPV of their home, as well as other information as to their rights concerning the ability to restructure their loan along with their lender.
When approaching a lender, the they're going to ask one straightforward question (in so many words): “Is our asset worth more in the long run if we modify the conditions of the mortgage, or is it worth more if we foreclose on the property and sell it today?”
The NPV provides the solution. You can take the NPV Test today as part of the Rebound Mortgage Modification Package.