Constantine in my opinion is an unsung hero in America. I wish more people knew what an amazing contribution to society he makes on a daily basis as a special education teacher. He has incredible patience and a disposition about him that makes a difference to every person he meets. The world needs more people like Constantine, that go above and beyond to do the right thing for people.
Constantine suffered some economic hardships due to him having to accept a lower paying job, something many people are doing in the current environment. This hardship caused Constantine to not have enough income to make his mortgage payment and this jeopardized being able to save his longtime family home.
Constantine did not buy above his means nor was he ever a sub prime loan borrower. This housing crisis has been portrayed to be the fault of irresponsible homeowners, but for the most part this portrayal is wrong. Hardships have fallen upon millions of people, companies, cities, states and complete industries. Whoever can’t see this, must be hiding under a rock, as so many people have fallen victim to the crisis at hand. It can happen to anyone.
Last year Constantine was denied for his request to Wells Fargo for the HAMP Home Affordable Modification Program for failing the NPV Net Present Value Test. Unfortunately his application was denied due to errors. It is not uncommon to fail this test and it is not uncommon for errors to occur. When Constantine was declined for his loan modification request he was offered an in house loan modification. The bad news is that it was not much different than what he was already paying so it was not much help. Constantine felt there was a problem. He was not sure why he did not pass the NPV test, and so many people are denied for this computer formula test, and most were never informed what that form letter decline letter even meant.
Denied for failed NPV is the extent of the explanation he received at that time. Now the denial notice has been expanded to include a little more information. This is the scenario; you have been waiting on pins and needles, you can barely sleep at night, and you can hardly perform your new job at half the pay for worry that you may also become homeless. NPV is all about profit. It tells the investor what is more profitable: helping the homeowner vs. foreclosure or short sale. When you fail NPV, to the homeowner this means losing your home.
Most borrowers have no idea what an NPV calculator is and do not have a clue why they received a negative NPV test result. This prompted the Dodd-Frank Act, Section 1482, effective 02/01/2011, which attempts to resolve some of the confusion homeowners were faced with as a result of being denied due to a negative NPV test, and the lack of an explanation. This act incorporates some accountability for servicers to provide much needed clarification of the information used to make the determination to homeowners so that they have access to check for accuracy of what is being used by the servicer.
Here is a typical notice most borrowers currently receive:
“…Negative NPV. The Home Affordable Modification Program requires a calculation of the net present value (NPV) of a modification using a formula developed by the Department of the Treasury. The NPV calculation requires us to input certain financial information about your income and your loan including the factors listed below. When combined with other data in the Treasury model, these inputs estimate the cash flow the investor (owner) of your loan is likely to receive if the loan is modified and the investor’s cash flow if the loan is not modified. Based on the NPV results the owner of your loan has not approved a modification…”
During the HAMP waiting game the weight of the pressure is overwhelming for most, and your mind starts racing to the worst-case scenario: “What if we lose our home?” And all you can get is a denial letter that feels like it is in another language, and the next letter tells you that you should sell you home. The problem is that Constantine, like so many others, was denied for HAMP in error. His income – teacher’s pay – was inaccurately calculated and he was almost forced to walk away from his home because of this mistake.
We contacted his servicer and requested the NPV values, the inputs that go into the NPV formula. At first we were given the run around but after several letters and calls we obtained the information and we set forth to get the income and property value errors corrected because we manually ran all of the numbers and came up with a reasonable calculation that gave clear indication that Constantine should have qualified for HAMP and should have passed the NPV test.
Constantine was told that if he escalated the errors then the other in-house modification was off the table completely, so that if he failed HAMP he would be given no other choices to save his home. This was a very unreasonable threat. Why would this be the case? Constantine should have the right to have the errors made corrected and rerun HAMP without being pushed into accepting something else only for fear of losing his home altogether. In Constantine’s case he had no choice but to forge on and go for it, because he could not afford the other payment. He advised his servicer that he wanted his file re-reviewed for HAMP and it was yet again ran only for the in-house program.
When the inputs were received we escalated his case to upper management. The first person again did not understand the reason for the request so we escalated the case again, this time working with someone who understood exactly where the mistakes were and stayed with Constantine’s case until the end. Constantine’s correct numbers were finally used and his corrected HAMP trial modification was approved and sent out. What a victory.
Five months later when the permanent HAMP loan modification was sent out, it was back up to the incorrect payment, which was a lot higher again. Thank goodness the liaison representative we were working with was really great. When we advised him of this he was able to go back to the negotiator in Loss Mitigation, get to the bottom of it and correct it quickly, and the final correct loan modification arrived.
Constantine is ecstatic. He is so grateful to have saved his home for his family and things are really starting to fall in place for him. He just got a new job closer to home with a great school district, and he is so happy to close this chapter of his life, taking from it the valuable lesson of determination and self advocacy, which begins with knowing your numbers, understanding the program and taking focused action.
Things can sometimes appear to be helpless, but there is hope. It is important to take a step back, take a deep breath and allow yourself to regroup. Getting out in nature and giving yourself some time to meditate can help you lower your stress level and provide you with an opportunity to gain the clarity you need to come up with an action plan, outside of the cloud of fear.
It is possible to appeal your findings. You are able to request the numbers that were used, and I highly believe you must do this and compare with your figures. If you find errors you must put your appeal in writing immediately and challenge the errors. I cannot over stress the fact that you must know your financial numbers and how they fit in with the guidelines as well as be prepared to be your own best advocate. Even if you go to an agency for help, if you don’t know your information how will you ever know if there are errors in what you are told or in a decision that can determine whether or not you save your home? Now is the time to be empowered.
Get informed, get empowered and then Question authority.
Save Your Home