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Article submitted by: 911 Foreclosure – Loan Modification Advice
Read More Articles at: Foreclosure Process and Loan Modification News
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While millions of homeowners struggle with being in, or frightfully close to foreclosure, it would seem well advised for more banks to approve the modification of loans on their books; before of course they got into foreclosure.

You would think.

On July 28th, the U.S Treasury Department held a meeting with the heads of the top 25 mortgage servicing companies. This meeting was accompanied by ACORN – the Association of Community Organizations for Reform Now, Neighborworks – the Neighborhood Assistance Corporation of America and the National Fair Housing Alliance to try and fix the unstable rate in which loan modification are being approved.

Earlier this year, the Obama administration disclosed their foreclosure prevention plan for troubled homeowners. It was estimated that 4 million homeowners could be assisted through this program.

With only 200,000 home being modified since February, and millions currently in foreclosure; one can barely call this progress ratio a success.

What is not being discussed in the media is the reason that so many modifications are being denied. There’s not much information about mortgage modification denials. But anyone can plainly see from the thousands of complaints on forums on the web that more modifications are being denied than approved. This is not a hard fact, rather an educated guess based upon observation.

Why are loan modifications so hard to come by?

The answer is a little factor called Net Present Value.

On September 15, 2008, the Mortgage Bankers Association held a regulatory compliance conference. At the conference, a presentation was made to the members of the MBA discussing

Net Present Value analysis and Loan Modifications. The primary focus was onhow mortgage bankers and servicers should use Net Present Value analysis to ascertain what is in the best interest of investors?.

Did you catch that? What is in the best interest of the investors not whats in the best interest of the Home Owners..

Boiling it down, Net Present Value or NPV considers the value of a dollar today and then compares it to the same dollar in the future. NPV is used to calculate the investors’ risk by comparing the value of the mortgage modified verse the amount gain in foreclosure.

Truth be told, while all the paperwork you need to file with your lender when requesting a modification may be perfectly filled out and you may look ?on paper? like a perfect candidate for a modification, you can still be denied because of an NPV calculation your lender performs. Fair? Probably not. But it is the reality of the game. And unfortunately, there is not all that much you can do about it except for this?

If you are speaking to an attorney or other loan modification expert and they say something like We have handled thousands of loan modifications and we’ll be able to get one for you, run like hell.

In all honesty, there isn’t a company or attorney that has thousands of modifications on their record. I you are seeking help with your modification, ask them about Net Present Value. If they can’t answer you, then obviously you’re seeking the wrong help.
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