NPV Test means the calculation and comparison of the net present value ("NPY"j of a modification versus the NPY of conducting no modification as to the same mortgage loan. The calculation ofNPY is arrived at using a proprietary formula developed by Wells Fargo. If the NPY of the modification would be greater than the NPY if there was no modification, the result is deemed "positive." If the NPY of the modification would be less than the NPY if there was no modification, the result is deemed "negative." **Office of the AI/ortley Gelleraf' means the Office of the Attorney General of California.
Net Present Value (NPV) Test A standard test that is applied when determining whether to modify a loan.
The ceiling on the allowable Discount Rate for the NPV Test is the Freddie Mac Primary Mortgage Market Survey rate (PMMS), plus a spread of 2.5 percentage points.
NPV Test: An NPV Test will be required on each loan that is in Imminent Default or is at least 60 days delinquent under the MBA delinquency calculation.
Loan Value = (1 - Redefault Rate) x NPV of Discounted Payments + Redefault Rate x (REO Disposition Value + Additional Accrued Costs) NPV Test (Continued) The formula used to estimate the cost of modification is: Description of the formula terms: FDIC Loan Modification Program Page 14 In Addition to Updated Liquidation Value, a Servicer must Formally Backtest Servicer and/or Portfolio Specific Assumptions and Regularly Update Assumptions Based on Industry Standards 1.
Mortgage Insurance: For loans that have mortgage insurance (MI) coverage, the NPV Test will incorporate the value of the contingent claim payment in the event of default when evaluating projected foreclosure or modification scenarios.