The Secret Test That Ensures Lenders Win on Loan Mods

By Alexandra Andrews and Emily Witt

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. Check out the full article here.

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