In the typical case I have, the beneficiary provides an NPV analysis as part of its analysis when there has been a denial of a modification.  In only one of my cases has anyone contested the NPV analysis.   In that case, the borrower represented himself. 

So the first question is, as a mediator, what percentage of your cases involve a dispute over the NPV prepared by the beneficiary?  

The second question is, if the housing counselor or attorney for the borrower do not bring up or contest the NPV analysis, do you as a mediator review the NPV analysis anyway? 

Thanks everyone,

Sherman Knight 

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Replies to This Discussion

Q1 - close to zero

Q2 - NPV analysis is a part of my effort at transparency. I open the session showing parties the blank mediator certificate and DoC complaint forms and start w/ statutory document exchange expectations (Bor & Ben may or may not agree sec 4 satisfied or sec 5 - here's a time to find that out...)

All respect - David K. Hiscock


How Often Involve a Dispute Over NPV?

I rarely find the NVP becomes a topic of negotiation.

Whether a NVP is relevant to the negotiation is for me, first a foremost, a question of whether the parties think it is. And they rarely do.

The FFA provides me with discretion, but not the obligation, to require the parties to consider the NPV if I determine that it will "assist the parties in addressing the issues of foreclosure." RCW 61.24.163(9).

I can decide by myself that I might think it would assist them. But I don't start there. The first question for me is whether they think it will assist them. Client Self-Determination, Standard I, Model Standards for Mediators. In the exercise of their informed decision-making, do they want to discuss the NPV?

When there is a denial, I always ask. If any party wants to discuss the NPV, we will. I also let them know that "any" NPV calculation that is "used" in the mediation will be attached to my certification. RCW 61.24.163(12)(e). That may be one from the servicer and one from the borrower. (I do not and will not "decide" among two NPVs which one is "right." Nothing in the FFA requires me to make that decision or gives me the authority to make it.)

Do I Review the NPV if the Parties Don't Bring it Up?

If they don't want to, we don't.

I think I might have tried it once just, well, because. I can't imagine that would be a useful way to spend time, doing something I wanted to do, that no one else wanted to do, and have them all stare back blankly at me.

If mediators want the parties to discuss the NPV when they don't want to, I'd sure want to have those mediators question their motivations. Is it because they think it's good for the borrower? If so, better check their impartiality-bones - I think they may be out of joint.

I appreciate that David does it in an super-over-abundance of caution in the service of transparency. To me, though it's not what I do, that's not a bad intention at all.

New Question: When an NPV Discussion Comes Up, How Effective is it?

Does an NPV discussion "assist the parties?" Maybe it could. But I've not seen it.

Servicer of course isn't usually interested. It doesn't serve much of any interest of theirs. I saw one servicer's counsel use their NPV to explain to the borrower why the mod was denied, but they didn't really need the NPV to do that.

How effective could an NPV discussion be for a borrower? It's only as effective as the borrower's representative makes it. Many borrower's representatives simply don't get it. Some apparently have never even heard of it.

(Is a borrower represented by an uninformed representative able to make "informed choices?" Well, maybe not. But providing much of anything more is beyond what I can do as neutral mediator while still acting impartially. I can inform with "general information." GR 24(d). But I can't apply the law to their "circumstances or objectives" and advise the party what I think that means for them. That would be practicing law (GR 24(a)) and establishing a representative attorney-client relationship - not gonna go there! I can't be the borrower's uber-representative. If unrepresented, I can tell them to go get representation, give them a referral list and really strongly advise them they absolutely need to go get someone to represent and advise them. But if they're already represented, I can't tell them to go get a better, more informed representative. We can only work with what we've got.) 

I've had borrower's representatives do their own NPVs and want to discuss them, but the servicer's counsel are pretty well-schooled in their stock arguments why they don't find the FDIC NPV calculation persuasive. So the few times the borrower's rep comes in waiving an NPV with a flourish and asking "so, what about this?" it just doesn't go very far.

At best, I would think it would take a very savvy and knowledgeable borrower's representative to make good, persuasive use of an NPV argument. I've just not seen it. There's really nothing for me to do if they don't make the argument. Even then, when I've seen something sorta like that, it's actually really been a negotiation about what inputs to use.

Sherman:  The NPV seldom comes up in my cases.  During my opening statement I always ask if there are any of the required documents still outstanding and sometimes it is the NPV as this is generated during the review process.  Most often it is a topic of discussion in terms of when it is provided, not as a tool.

If a modification is denied on the basis of the NPV then it becomes a subject of discussion and is taken up in the appeal process.  If BOR and BEN both provide NPV data, as Jeff does, I include it with the certificate.

I always look at the NPV provided by the BEN, if provided prior to the mediation.  I do not run my own unless in the presence of the parties.  

It is 100% a part of every mediation since it is a requirement of the certification process, but as an actual conversation part of the mediation I would say less than 20%.   

Nancy, I have a slightly different phrasing of the FFA requirements regarding NPV. It comes from the changes made to the FFA in 2011/12.

There are now three related-but-different things the FFA talks about regarding NPV: submission of NPV data/inputs, running of NPV tests/calculations, and NPV tests/calculations as attachments to certifications. Those three different things have three different requirements:

  1. The beneficiary must provide the NPV data inputs. RCW 61.24.163(5)(g).
  2. The mediator may require the participants to consider a NPV calculation when required under any federal mortgage relief program" (e.g., HAMP) and "may run the [NPV] calculation" it if it might "assist them in addressing issues of foreclosure." RCW 61.24.163(9), (9)(c).
  3. If no agreement is reached, the mediator must attach to the certification "any net present value test used" in the mediation session.  RCW 61.24.163(12)(e). That necessarily implies that if no NPV test is "used," none need to be attached. 

These reflect the changes to the original FFA following the stakeholder negotiations in 2011/12 legislative session. Getting the NPV requirements changed was a big deal for the lending industry and they got it. The biggest thing - unrelated to the specifics of this discussion - is they got a failing NPV removed as a per se basis for a bad faith determination and CPA violation. It can still be used to enjoin the foreclosure which is what the borrowers advocates wanted most.

There were two other changes then that are relevant to this discussion.

First, it used to be mandatory for mediators to require the participants to consider NPV tests/calculations (#2 above). After the 2012 amendments, they are no longer a required part of FFA mediations. The mandatory language "must" was replaced with the discretionary "may."

Similarly, the requirement to attach NPV test/caclulations to certifications also changed (#3 above). The original FFA said the NPV test used must be attached (presuming there would always be one). After the 2012 amendments, now that NPV test is discretionary and there may not be one, only any NPV test used must be attached.

I agree that NPV data/inputs are still and remain always a part of every mediation; we always make sure the beneficiary has provided them because they are required. But in the exercise of my discretion, I have them consider an NPV test/calculation in the session only when someone thinks it might be helpful. If we they do, or if for any reason we ever "use ... any" NPV test/calculation at all, it gets attached to my certification. I only attach any certification which was used which isn't very often.



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