Discounted Payoff NPV Calculator

DPO offers speed vs foreclosure drag.

Loan balance (UPB)

DPO offer

Foreclosure net recovery

Months to foreclosure

Discount rate %

DPO NPV advantage

$39,860

DPO today

$2,000,000

Foreclosure NPV

$1,960,140

How the math works

Foreclosure NPV = recovery / (1+r)^years. DPO advantage = DPO − foreclosure NPV.

$2.2M foreclosure recovered in 1.5 yr at 8% = $1.96M NPV. DPO $2M today vs $1.96M NPV = $40k advantage. Accept DPO.

How to Use

Enter loan balance.
Enter DPO offer.
Enter foreclosure expected recovery.
Enter months to foreclosure.
Enter discount rate %.
Read NPV comparison.

Frequently Asked Questions

What is DPO?

Lender accepts less than full balance to release lien now, avoiding foreclosure. Typical discount: 20-40% of UPB. Lender saves foreclosure cost, time, deterioration. Borrower avoids foreclosure credit hit. Common in residential and small-balance commercial.

Analysis?

Compare DPO proceeds today vs expected foreclosure net proceeds PV. Include time value, foreclosure costs, deterioration risk. DPO often wins on NPV even at 30% discount given 12-24 month foreclosure timeline + 15-25% foreclosure cost.

Negotiation?

Lender's break-even discount = foreclosure expected net / UPB. Borrower offers just below lender break-even. Converse negotiation: lender drives up offer to reduce loss. Settle at mutually beneficial point. Third-party mediators helpful for complex cases.

How often should I rerun this?

Rerun this calculator whenever inputs change materially — new rent roll data, rate moves, loan balance updates, or quarterly operating data. For active deals, monthly refresh is typical. For stabilized assets under monitoring, quarterly is fine. Treat the output as a decision tool, not a one-time answer — market conditions evolve and so should your analysis.