Using the Tool in Mortgage Modifications

With the government's CheckMyNPV tool you can estimate your net present value, which determines whether your lender is likely to approve a mortgage loan modification.

The HAMP program ended on January 1, 2017. If you’re struggling with your mortgage payment, contact your mortgage company or a housing counselor at 888-995-HOPE (4673) as soon as possible.

Mortgage servicers and lenders use net present value (NPV) assessments when deciding whether or not to offer you a loan modification. The NPV calculation tends to be confusing to homeowners so the U.S. Treasury Department set up a free online tool to assist you in conducting your own evaluation. Read on to learn more about using the tool and how it can help you when pursuing a loan modification from your lender.

Understanding the NPV Test

An NPV assessment evaluates whether it is more cost-effective for the owner of the loan to provide a borrower with a loan modification under the Home Affordable Modification Program (HAMP) or to foreclose.

What the Servicer Looks at in an NPV Assessment

As part of the NPV assessment, the mortgage servicer takes into account the following:

  • the property’s fair market value
  • the cost to foreclose, maintain the property, and complete any needed repairs
  • the costs to market and sell the property if no one buys it at the foreclosure sale, and
  • net sales proceeds.

The expected cash flow from a loan modification is also part of the NPV calculation. The loan servicer will look at a borrower’s income, credit score, and mortgage debt information, including:

  • the unpaid principal balance
  • the original loan amount
  • the remaining term, and
  • monthly payment information.

You either pass or fail an NPV test when it comes to loan modifications.

If the test results reveal that a loan modification is NPV positive, then you generally get a loan modification (though this is subject to investor restrictions) because the investor would get a greater return from modifying the mortgage rather than foreclosing. However, if the test results are NPV negative, this means that a foreclosure is more financially beneficial to the investor.

How to Use the Tool

The NPV model is complicated, however the website simplifies the analysis by allowing users to input their own information and receive an immediate NPV assessment using the same formula used for HAMP. To conduct a net present value (NPV) evaluation of your situation, go to and select “I’m Ready, let’s begin.”

While the website only provides an estimate of a mortgage servicer’s NPV evaluation, it will give you a good idea of whether or not you qualify for a loan modification.

How to Use the Tool If You’re Denied a Loan Modification

You can also use the tool if your mortgage servicer denied you a loan modification due to NPV. Go to the website and enter the NPV input values given in the HAMP Non-Approval Notice received from your mortgage servicer. Then review the outcome provided by compared to the notice.

If you discover that the servicer used incorrect information in their calculation (such as a significant difference in your gross monthly income or an incorrect property value), you have 30 days to correct any NPV values. Then your servicer is required to re-run the test.

Keep in mind that the results could differ because of variations in input information and other industry-related data. If you get a result that is different that what your mortgage servicer provided, save a copy of the evaluation and call the servicer to discuss the results.

How Can a Foreclosure Be More Beneficial Than a Loan Modification?

You might be wondering how a foreclosure could possibly be more financially beneficial than a loan modification. In many cases, borrowers who are given a loan modification default again at some point in the future and end up in foreclosure anyway. The NPV test takes this into account and estimates the likelihood that the borrower will eventually fall behind in payments again, even if a loan modification is granted. If a borrower is likely to default again, the investor will let the foreclosure proceed since it makes more financial sense to liquidate sooner rather than later.

For More Information

If you would like to learn more about the NPV calculation, go to and click on “Download the Official Net Present Value Whitepaper.”

For more information on government programs for distressed homeowners, visit Nolo's Government Foreclosure Prevention Programs area.

To get information about other options to avoid foreclosure, see our Alternatives to Foreclosure area.

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