; and (iii) the loan modification has a positive net present value (as defined under subparagraph (D)(ii)(IV)(bb)). (D) Earned principal forgiveness (i) In general If, after reducing mortgage note principal under earned principal forgiveness provided in clause (ii), a target affordable regular mortgage payment has not been achieved, the servicer of the mortgage shall comply with the affordable loan modification plan waterfall steps as set out by the Bureau of interest rate reduction, term extension, and principal forbearance, as necessary to achieve a target affordable regular mortgage payment. (ii) Earned principal forgiveness (I) Principal reduction The Bureau shall determine standards by which a mortgagor who has received an affordable loan modification shall remain in good standing in order to participate in a reduction in mortgage note principal under this paragraph. (II) Principal reduction required Except as provided under subclause (III), a servicer shall offer a borrower an affordable loan modification having the maximum amount of principal reduction that results in a positive net present value calculation. For purposes of calculating net present value, a servicer may use their own formula, if it has been approved by the Bureau, or may use a default formula determined by the Bureau. (III) Exceptions (aa) Greater principal reduction A servicer may offer a greater principal reduction, if such a reduction is consistent with the terms of any contract with respect to the mortgage. (bb) Loan-to-value ratio A servicer is not required to offer a principal reduction that would result in a loan-to-value ratio of less than 100 percent. (IV) Rules of construction (aa) Maximum amount of principal reduction A principal reduction amount may be considered the maximum amount if it is within $1,000 of the actual maximum amount. (bb) Positive net present value calculation A net present value calculation shall be deemed to be positive for the mortgage investors if the net present value result for an affordable loan