Feb. 2 (Bloomberg) — The U.S. Treasury Department is considering changes to its “net present value” test used to determine whether lenders can write off mortgage principal for borrowers seeking more affordable loan terms.
The Obama administration’s main foreclosure prevention plan uses the standard to measure whether lenders and bond investors would net more money over the life of the loan by foreclosing on the property or by lengthening repayment terms and reducing the amount of interest or principal owed.
“We’re looking at the NPV model to see whether there should be some changes” that would lead to more principal writedowns, Seth Wheeler
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