By Charles R. Gallagher III, Esq.

They finally admitted it! After a recent deposition, counsel for the bank candidly said, “Of course we use financials for loss mitigation purposes to target suitable judgment debtors for post judgment execution.” After hearing the implausible party line mantra ad nauseum that confidential personal financial disclosure would only be used to determine what loss mitigation options best fit the homeowner’s needs, finally a bank attorney was honest about the true reason banks seek financials from homeowners in foreclosure.

by Denise Evans

Any attorney who negotiates loan workouts or short sales needs to understand the Net Present Value (NPV) analysis used by virtually all lenders. 

Simply put, the lender calculates the value of a foreclosure and compares it to the value of a workout or short sale.  Because a foreclosure and a loan modification will yield future cash, the lender must discount them to today’s cash equivalent in order to compare them to the nearly-immediate cash obtained from a short sale.