When you apply for a loan modification, among the variables that will determine whether or not your application is approved or denied is NPV.  NPV is a scoring model that lenders use to determine the answer to assorted questions of concern to the lender, most of which will not be disclosed to you, or anyone else. 

NPV is actually a test, very likely unlike any other test you have ever taken, or ever will take again.  While the results are either pass/fail, some of the questions are unknowns, and that you actually have no opportunity to answer.  In fact, you have no control over how the answers are derived and filled in for you.

NPV is the "net present value" of your home and is based on a few variables that have been disclosed including:

1. Are you likely to re-default on your payments if a modification is granted?
2. Are you likely to catch up on your dellinquency if a modification is denied?
3. How much is your home worth now?  relative to how much you owe?
4. How much is it estimated your home will be worth in a year?
5. How much will it cost the lender to maintain your home if the lender files foreclosure instead?
6. How much will the lender make or lose on a foreclosure sale (using a government REO formula).

Lenders put all this information into some secret formula and either modify or decline your loan based on this information.  The problem is that this information is not disclosed to the borrower.

Because some of the above statistics can and do change based on market values, you might be denied a modification this month, and possibly qualify next month or several months from now.  For instance the estimated value of your home in a year is determined by government home value projections, and this information is updated quarterly. 

Is there anything you can do as a home owner?  At this point, there is little that is in your control.  It has been suggested that one place that home owners fail often is the hardship letter.  If you do not submit a good hardship letter, your request will be declined.  This is one area where the government non-profit housing counselors might be able to help you.  These counselors do know how to draft a good hardship letter. 

While there has been quite a bit of pressure to have open disclosure about the NPV data, lenders believe that their formulas are too complicated for the average home owner to understand. 

This may be true for the average home owner, but should be available none the less.  While you, Mr or Mrs Homeowner may not understand, there is always help out there to make numbers more clear if you care to avail yourself of this assistance. 

The other consideration, of course, for the banks using these models and fighting disclosure is that what you don't know (such as the estimated value of your home in a year), you can't appeal or fight.  This makes the banks more powerful and their decisions more final. 

Resources:  Bankrate.com  Want a loan modification - pass the test