On Friday, October 1, 2010, Fannie Mae, as program administrator for the Home Affordable Modification Program (HAMP), plans to release the base Net Present Value (NPV) model v4.0 spreadsheet tool, which will include new input fields, changes to existing input fields, and new output fields. As stated in the HAMP Guidelines:

A standard NPV Test will be required on each loan that is in Imminent Default or is at least 60 days delinquent under the MBA delinquency calculation. This NPV Test will compare the net present value (“NPV”) of cash flows expected from a modification to the net present value of cash flows expected in the absence of modification. If the NPV of the modification scenario is greater, the NPV result is deemed positive. If the NPV Test generates a positive result when applying the Standard Waterfall , the servicer is required to offer a Home Affordable Modification to the borrower.

The REST Report

Mortgage servicers work under a contract known as Pooling and Servicing Agreements (PSAs) which require the servicer to make decisions in the best interest of the investors who own the loans. The REST loan disposition analysis system runs proprietary algorithms, NPV analytics, accesses numerous property valuation databases, and produces a Report that shows your lender or servicer the best financial outcome for the investor. This could be a modification under the government’s HAMP program or conventional in house modification program, or it could be that you don’t qualify for a modification at all.

Will you pass the NPV?

The REST Report will tell you whether it is in your lender’s financial interest to modify your loan by calculating the Net Present Value of a modification as compared to other foreclosure options. You will then be able to make a more informed decision about the best course of action for you and your family.

If the NPV Test generates a negative result, modification is optional, unless prohibited under contract.
The U.S. Treasury Department’s most recent HAMP NPV Model (V 3.1) is currently only available to participating HAMP servicers. For this reason the model used by the REST Report, has certain variations. Although the REST Report is a proprietary model, based on version 3.0 and the input provided by the borrower, the loan modification terms proposed in the REST Report should fall within the allowable tolerances of the HAMP eligibility guidelines.

Learn More about the REST Report at HAMP REST Report.