Loan Modification Recapture Calculator

Loan mod NPV compares lender's modified expected cash flow vs alternative (foreclosure).

Current balance

Original rate %

Modified rate %

Original term remaining

Modified term

Principal forbearance

New monthly payment

$1,046

Original payment

$1,933

Monthly reduction

$887

How the math works

Modified payment = (balance − forbearance) at modified rate × modified term.

Original $1,933/mo. Modified ($300k − $30k forb) at 3.5% × 40 yr = $1,047. Reduction $886/mo.

How to Use

Enter current balance.
Enter original rate %.
Enter modified rate %.
Enter original term remaining.
Enter modified term.
Enter principal forbearance.
Read new monthly payment.

Frequently Asked Questions

Loan modification levers?

Rate reduction: 0.5–3.0% rate cut, often to floor 2–4% (HAMP-style). Term extension: 30 → 40 years adds principal stretch. Principal forbearance: deferred until maturity (interest accrues separately or 0%, recouped at sale). Principal forgiveness: rare, 5–25% reduction in extreme cases. Capitalize arrears: add missed payments + late fees to principal balance. NPV test: lender requires modification NPV > foreclosure NPV (typically by 5–15% margin).

How does this debt analysis fit a workout strategy?

Workout, default, and recapitalization decisions depend on the gap between in-place debt and current asset value. Lenders evaluate cure cost, foreclosure timeline + cost, broker price opinion (BPO), and borrower equity. Borrowers evaluate equity in the property, refinance feasibility, and forbearance economics. This calculator provides one input to that multi-factor decision.

Discounted payoff (DPO) vs forbearance vs deed in lieu?

DPO: lender accepts less than full balance to avoid foreclosure cost, common with non-recourse and underwater assets. Forbearance: payment deferral 6–18 months, balance accrues, useful when value will recover. Deed in lieu: borrower transfers title to lender, faster than foreclosure but lender takes full risk. DPO often best when borrower has new capital + lender wants quick exit.

Special servicing dynamics?

CMBS loans transfer to special servicer at default or maturity default. Special servicer compensation aligns with workout, but timeline is 6–24 months and fees stack ($25–250k+ in costs). Whole-loan and balance-sheet lenders move faster but with less flexibility. Bridge and debt fund lenders most flexible. Time-to-resolution and total friction cost should be weighted in any borrower scenario.