HAMP: NPV Reformed Rules for Consumers

By: Anna Cuevas

On February 1, 2011 HAMP servicers will being to implement the changes brought into existence by Section 1482(a) and (b) of the Dodd-Frank Act also known as the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This act will bring some much needed reform to the current processing fiasco that homeowners that are being denied due to NPV are going through.  The notices will be revised to now include the following:

• A list of borrower and mortgage-related Net Present Value (NPV) input fields and the values used in the NPV calculation to evaluate the borrower’s first lien mortgage loan.

• Changes to the process by which borrowers request NPV inputs.

• Guidance relating to borrowers who dispute  the property value used by the servicer for the “Property Value” input in the NPV calculation.

In addition, they are working on a borrower NPV calculator, they expect to be available by spring 2011.

Dodd-Frank NPV Notice Requirements

If you are not approved for a trial plan or permanent HAMP loan modification, you servicer (in the case of this announcement, not Freddie Mac or Fannie Mae backed mortages) is required to send you a Non-Approval Notices which is to explain the reason you are not approved and provide you with an opportunity to submit evidence that the information used in the evaluation was inaccurate.  The servicer must also advise you of whether the NPV test was performed and whether the result of it was negative.  This Non-Approval Notice must include the NPV input values, where previously you had to request them. They will also be required to send you the NPV Datea Input Fields and Values chart.

The servicer will be required to provide information on how to communicate with them if you wish to dispute the reasons for the non-approval determination and where you can send your evidence.

The purpose of providing you with the NPV values is to give you and opportunity to see what information was used to determine that you were ineligibe due to a negative NPV and allow you to correct any of the information that impacted your eligibility.  You have 30 days from the date of the Non-Approval Notice to submit the written evidence of any inaccuracies in your NPV inputs to the servicer, if you are disputing more than one input provide documentation for each item within the same correspondence.  Make sure it is faxed and overnighted with a return reciept to avoid the other headaches you may have experienced in regards to lost documentation.   The servicer cannot conduct a foreclosure sale until they review the inaccuacies, but follow up on your part is highly suggested.

If what you provide is valid and can make a change to the NPV outcome then the servicer must perform the NPV calculation with the corrected information and the servicer must provide the updated outcome and newly input values to you the borrower.

You may also be directed to seek assistance directly from MHA or HOPE prior to contacting the servicer and they can do a preliminary run of your corrected inputs, however if by using your updated information your results are still negative then you are not eligible for another re-evaluation, or appeal for other inputs by either MHA, HOPE or the Servicer.

This goes on to be a bit vague because it says you can still go to them for help in WRITING ONLY for the remainder of the 30 days, but it states that they will not accept an appeal for any “other” inputs.

Disputed Property Value Input

For the first time ever, they are speaking to another huge issue that borrowers have faced, the issue of the incorrect property value being used and the servicers refusal to give homeowners the property value they used to deny you for negative NPV –

So if you are not approved for HAMP because of negative NPV and you believe the property value they are using differs from the fair market value of the property as of the initial date they ran the NPV then you may request an NPV re-evaluation within 30 days of the Non-Appoval Notice, you must provide an estimate of the property value along with any other documentation of any other material disputed inputs.

If the preliminary re-evaluation using this information results in a positve NPV result then you have 15 calendar days from the date of the notification that the preliminary NPV result is positive to submit $200 deposit against the full cost of the appraisal by a licensed appraiser not affiliated with the servicer.  The servicer will add the balance of the actual appraisal cost to your total arrearages. However the servicer will not be required to obtain a new apprasial if they had already obtained one performed in accordance with the standards listed here.  They must provide you with a copy of the appraisal.

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