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Two federal government agencies have unveiled a website that allows homeowners who are struggling with their mortgage payments to run their own net present value (NPV) tests.
These calculations, which use dozens of inputs to compute the NPV of a house or condominium, are a crucial test in whether a homeowner will qualify for easier loan terms through the government's Home Affordable Modification Program (HAMP).
Until now, homeowners have been largely in the dark about the NPV test, apart from the fact that it can trigger a seemingly inexplicably no in response to a loan modification request.
With the website, borrowers can run their own HAMP tests, using different variables to better understand the effects of the lender's assumptions. The model is based on the HAMP parameters, which the user can't change, so the website can be used to run HAMP -- and only HAMP -- NPV tests.
A product of the U.S. Treasury and U.S. Department of Housing and Urban Development, the website is surprisingly good, at least on the face of it, though the URL, CheckMyNPV.com, leaves much to be desired as does the fact that it's an official government service using .com, rather than .gov.
Still, the information is clear and concise. Homeowners will find not only the NPV test, but also a "Steps To Complete This Form," sample loan servicer's NPV inputs disclosure letter, extensive FAQs and "Quick Start Guide." That last item includes a list of figures needed to complete the exercise, things to remember and helpful tips. The main page also contains an estimated completion time of "around 15 minutes" and two important warnings: data cannot be saved and the back function will wipe the slate.
The HAMP test is based not on the borrower's neediness or worthiness, but whether the loan modification makes financial sense for the lender. If so, a trial must be offered. If not and the borrower is in default, the foreclosure can proceed.
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