Banks wanting all one’s cards on the table during a loan mod is not far off from what short sales typically look like.

As I understand the short sale, you have to show that you really can’t afford keep the house or make it right with any savings or assetts you might have.

It boils down to this, if the borrower wants the house, and the loan mod officer says the 401K must be on the table, or you’ll lose your property, then the borrower either puts it on the table, or loses the property.

I don’t know any of the legal side of it, but you’d think that the banking industry would, by now, have cleaned up their act and that if they are asking for 401K money as a backstop, then they are probably on solid ground.

Simple way to validate this would be to research it with other banks.

On another note, a friend of mine who has been tracking the economy closely for a while, thought that Obama might do well to allow people to more easily tap 401K funds (with little or no penalty) to save a home. Cannot corps raid the employees retirement fund if falling on hard times? Maybe the US should allow citizens to do the same as a financial life line……