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Asked 7/6/2007
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if bank forecloses and no equity can they take our 401k money? We have a negative amortizing loan and now owe more than our home is worth can the bank claim our 401k retirement money? |
Answer 1/3 - Submitted 7/6/2007
NOPE,, Only the home is security for the loan. There are tens of thousands of people in your situation. There is no guarantee when or if the market will go up. Prices rose too fast and financing was too easy to get. Many people bought homes at grossly inflated prices.
Negative amortization loans are the worst loans ever invented (for the borrower)..
they are great for the lender and the mortgage people who sell them receive the largest commission in the industry for putting you into that bad loan. It's a shame what has happened.
Nobody has a crystal ball to know the future. If you can afford the payments, you have a place to live.
Anybody who took these loans was just gambling, but probably didn't realize it.
I'm sorry that you are in this situation. The American dream of home ownership has turned into the American nightmare for many, and it may get much, much worse in the next couple of years.
Answer 2/3 - Submitted 7/6/2007
No, normally any type of "qualified" investment (401k, IRA, SEP, Simple, etc) is off limits to any creditor but in order for any creditor to attempt to get at the "qualified" investment, you would need to file for bankruptcy protection. Foreclosure does not have to lead to bankruptcy, but often does. Unfortunately you are not alone. However, you do need to figure out a permanent plan for your housing. Acting today by either continuing on with your existing loan and making the required payments now and into the future, or making the call to your lender and see if they are able to make changes to help you out or if you should give up the home. Doing nothing is not the best option.
Answer 3/3 - Submitted 7/6/2007
No, retirement accounts are specially protected.
The mortgage is secured by the house. The lender can take the house. They can also get a "deficiency judgement" for any extra loss they take. The judgement can be pursued.
Best to try to work out a solution with the bank.
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