YOU FAILED “OUR NPV FORMULA”…So We are Foreclosing!

That’s the explanation I received from LITTON Loan Servicing yesterday after 6 months of waiting for their answer on a loan modification for a disabled former VA Doctor. Their denial did not address his income and ability to pay a modified payment. Their denial didn’t address the fact that he had always been on time until his health failed him and he had to leave the employment of the Veterans Hospital of over 20 years. Their denial was totally based on the fact that the house FAILED THEIR PROPRIETARY NPV FORMULA and they will just force the foreclosure on December 1st 2009. 

This is an ANSWER that all too many borrowers are receiving and it is hard to FIGHT! How do you fight a formula that THEY DESIGNED?

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.

The Treasury Department has refused to release the exact formula for the NPV model, bringing criticism from homeowner advocates and industry experts. Cloaking the NPV formula in secrecy makes it difficult to identify any potential flaws in the design of the program, which has generated fewer modifications than anticipated . There are assumptions built into the model, and they may not be the right ones, said Diane Thompson of the National Consumer Law Center. “Someone needs to be able to review it.” [1]

The Doctor should of easily qualified for the Making Home Affordable Program that was instituted by President Obama and the Treasury of the United State on March 4th 2009. He has a TRUE HARDSHIP with his health problems that forced him into retirement from the VA. And he still has the ability to PAY a reasonable reduced payment. 

I believe the LITTON Loan Servicing NEVER tried to qualify Dr. “M” for the Making Home Affordable Program. Doctor “M” was denied was because LITTON DIDN’T WANT to modify the terms of the loan. As of August 2009 Litton wasn’t MODIFYING ANY LOANS under Obama’s Making Home Affordable Program known as HAMP? BUT THEY SAID THEY WERE GOING TO? But this was only after they were embarassed with the news in an August AP article that exposed HOW the Banks were dragging their feet to help troubled borrowers.  And as of August LITTON hadn’t participated in the the program at all!

So WHO is LITTON Loan Servicing? LITTON Loan Servicing is owned by Goldman Sachs. And the last Treasury Secretary, Hank Paulson, left Goldman Sachs as CEO to be President Bush’s Treasury Secretary, and was the architect of the original $787 BILLION DOLLAR BAILOUT. You know, the BAILOUT that was necessary to SAVE THE WORLD from financial collapse. Remember how the money was to be used to buy TROUBLED ASSETS from Banks so they could HELP SAVE THEIR CUSTOMERS with new lending programs? NOTHING could be further from the TRUTH! So far The Banking Industry, along with the likes of Goldman Sachs and Litton loan servicing have fattened their balance sheets with over 3 TRILLION of TARP MONEY.

As far as helping Dr. “M” save his homeI have contacted Congressman Duncan Hunters Office in San Diego, and the U.S. Treasury in a effort to rectify the travesty of the NPV Formula. I’ll keep my readers informed of the outcome!

Uppitybanker

[1] http://blogs.creativeloafing.com/theclog/2009/09/16/secret-test-that-ensures-lenders-win-on-loan-mods/