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Robb Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-16-09 02:11 PM
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The Secret Test That Ensures Lenders Win
The Secret Test That Ensures Lenders Win on Loan Modifications

NPV Test: Failed.

That was the red-lettered verdict on the computer screen of a CitiMortgage negotiator in June. The result: An 83-year-old widow in Illinois was denied a loan modification through the Obama administrations Making Home Affordable program, even though the employee admitted in an e-mail, I am unable to come up with a reason for the denial.

(snip)

If the NPV test ultimately churns out a negative result, meaning the lender will make more money by denying the modification, the homeowner wont get a Making Home Affordable modification unless the lender agrees to take a loss.

Even though the administration is promoting loan modifications, theyre still operating from the premise that we dont want you to make loan modifications that arent going to make more money than a foreclosure, Cecala said. This is very different from what community groups see as the (programs) purpose.

(More...)
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Robb Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-16-09 04:01 PM
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1. Kick. nt
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gratuitous Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-16-09 04:05 PM
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2. If CitiMortgage gets in trouble with their loans
Ah well, no biggie. If CitiMortgage refuses to renegotiate any loans because they won't be as profitable, they'll just slip another ransom note under the door of Congress, and help themselves to several billion more taxpayer dollars. Sucks to be an individual consumer, but then we could have all chosen to be anonymous money-grubbing banks and corporations. Long live the "free" market, where risk is socialized and profit is privatized!
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alstephenson Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-16-09 04:54 PM
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3. There are so many variables in a net present value calculation.
They probably have it rigged so that it is difficult to pass the NPV "test", but they can say that they made "every effort" to modify the loan. Crooks - all of them.
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AllentownJake Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Sep-16-09 04:57 PM
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4. Thank you Evan Bayh
The biggest opponent to allowing people have mortgage relief in the Senate.

His wife being on 5 corporate boards probably didn't hurt his opposition.
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