FHA Guidelines

citi mortgage net present value calculation for mortgage modification

The current mortgage balance and current mortgage payment are key parts of the calculation used by the bank.  The current loan balance must include all missed payments, any costs paid for you-such as property taxes or insurance.  Late fees, penalties and other miscellaneous charges are not allowed to be added into the balance per federal guidelines.The gross monthly household income that you indicate on your RMA financial worksheet will also be used in the Waterfall Calculation.  You must not have too much or too little income in order to pass the criteria.  Verify your required income by running your figures through the  Loan Modification Calculator

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 administration’s 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.” The Net Present Value test is a complex computer model used by loan servicers to determine whether a homeowner qualifies for the federal loan modification program.  The test compares two scenarios – modification and foreclosure – and determines which would be more profitable for the lender. If it’s foreclosure, the lender has no obligation to modify the loan. But the model is a black box. What goes in isn’t entirely clear, and what comes out isn’t always reliable.

A mortgage lender is the institution you work with to get a loan. A mortgage servicer is the financial institution that is responsible for the administration of your mortgage loan. Your mortgage servicer receives your payments, keeps track of the principal and interest on your loan, and might set up an escrow account for you. You can find out your mortgage servicer by reviewing t your mortgage bills or coupons. Some institutions are both mortgage lenders and mortgage servicers. Other institutions are just mortgage lenders, and they sell your loan to a mortgage servicer who then manages it.

The Home Affordable Refinance program will be available to 4 to 5 million homeowners who have a solid payment history on an existing mortgage owned by Fannie Mae or Freddie Mac. Normally, these borrowers would be unable to refinance because their homes have lost value, pushing their current loan-to -value ratios above 80%. Under the Home Affordable Refinance program, many of them will now be eligible to refinance their loan to take advantage of today’s lower mortgage rates or to refinance an adjustable-rate mortgage into a more stable mortgage, such as a 30-year fixed rate loan.

By entering information about your mortgage, such as your income, credit score, property value, mortgage balance, and interest rate, you can finally run the same test that your mortgage servicer is running and potentially be able to tell if you mortgage servicer has wrongfully denied you for a loan modification, or if they should be able to qualify you for a loan modification when you apply for one.

Luckily, however, in most cases, a loan modification will be in both the bank’s and the borrower’s best interest. This is because the amount that the bank will get at a foreclose sale is usually less than the amount of the mortgage, whereas the amount the bank will get from a loan modification and the payments of both principal and interest over up to 40 years will be far more than just of the principal amount of the mortgage.

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