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On NPV and Schrodinger's Cat. Or Why You Can't Get Your Permanent Loan Modification II
What is NPV, you ask?  What does it have to do with why I can't get my Permanent Loan Modification?   And who the heck is Schrodinger's Cat anyway????  
 
In my last post on the subject, The Elephant In The Room, we talked about how Servicer Compensation based upon a percentage of the Outstanding Loan Pool Balance might be skewing the way your Loan Modification Request gets handled. 
 
Next up in our Little Shop of Horrors is NPV or Net Present Value. 
  
Net Present Value is a formula that makes Schrodinger's Equation look simple.  And like the famous Quantum Physics Thought Experiment, there is no way of telling in advance whether the cat is alive or dead. 
 
The sole purpose of the NPV Test is to compare modification to foreclosure and determine which scenario is in the best interest of the investor.  Yes...the investor, not the homeowner.  Treasury Guidelines clearly state that the servicer is allowed to use the NPV test and is under no obligation to modify if foreclosure would be more profitable for the investor. 
 
Unfortunately for the homeowner, the NPV Test is a complex formula that makes guesses about many things, ... more

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