Don't attempt to do this on your own without the right tools and resources
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The NPV test is a test generated by the NPV software platform, which is a loan disposition analysis system that, in various forms, is used by major banks and mortgage servicers. Financial institutions use systems like NPV to analyze the various options available when a loan may not be repaid as agreed by a borrower. The purpose of such analysis is to make sure that the bank can choose the path that offers the best financial outcome possible.
Although essentially all banks and financial institutions use loan disposition analysis software platforms, these systems are not made available to consumers. They are sophisticated systems only purchased and utilized by banks that have many thousands of loans that need to be analyzed so that outcomes may be optimized.
When homeowners arrange to run a NPV Test, the system produces an 11-page document based on the specifics of their property and their financial situation that shows, from the bank's perspective, the various financial outcomes that would result from modifying their mortgage compared with the costs of foreclosure. A homeowner can then use the test by submitting it to his or her lender or servicer, along with the required supporting documents, when seeking to obtain a loan modification, or approval for a short sale.
Compare the approach when using the NPV Test to that of today's homeowners applying for a loan modification. Some homeowners attempt to negotiate with their lender or servicer on their own, but in that case, all the homeowner ends up submitting to the lender or servicer is information about themselves, and nothing substantive about the possible dispositions of that loan from the bank's perspective, or in the best interests of investors.