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

 

The purpose of the NPV test is to indicate to lenders how to make the most money off of a particular borrower. Ironically, homeowners who have more equity in their home may be at a disadvantage

 

If the NPV test ultimately churns out a “negative” result, meaning the lender will make more money by denying the modification, the homeowner won’t get a Making Home Affordable modification unless the lender agrees to take a loss.

“Even though the administration is promoting loan modifications, they’re still operating from the premise that ‘we don’t want you to make loan modifications that aren’t going to make more money than a foreclosure  “This is very different from what community groups see as the (program’s) purpose.”