Loan Mod – Requires using 401K money?

[PadreBrian]

[quote=UCGal]Ok… People who need mortgage mods are those that have mortgages they contractually committed to, but are now looking for reductions in interest or principal. Why is it considered bad to look at ALL of that persons assets as “fair game” before putting a mod through? If the person had non-retirement savings would that be exempt from consideration? Probably not.

Truthfully, I don’t see why 401ks should be considered as untouchable. Loan mods are a renegotiation of the contract – and there should be a give and take.

Hypothetical example: “Bob” has $500k in 401k. He has a mortgage for $400k. His house is now worth $350k. He’s looking for a loan mod. Why should the bank reduce his payments or principal when he’s got a significant chunk of money sitting there?[/quote]
I’m with you. These are the bank robbers who took the liar/ option only/ zero down “loan”…and NOW they bitch because they now actually have to provide 3.5% equity for the new lower loan amount? Holy ruck batman.

[urbanrealtor]

Well our current system of finance allows for some items to be immune to contracts of indebtedness.

Lots of retirement items are also immune from lawsuits.

Before that we had debtors prisons and credit crunches every 15 years that filled them up.

Question:
Would the debtors go better next to the illegal immigrants or the pot heads?

Another question:
Would allowing one to sell oneself into slavery be a road out of the debt mess?

So many wonderful ideas…

[urbanrealtor]

Well our current system of finance allows for some items to be immune to contracts of indebtedness.

Lots of retirement items are also immune from lawsuits.

Before that we had debtors prisons and credit crunches every 15 years that filled them up.

Question:
Would the debtors go better next to the illegal immigrants or the pot heads?

Another question:
Would allowing one to sell oneself into slavery be a road out of the debt mess?

So many wonderful ideas…

[urbanrealtor]

Well our current system of finance allows for some items to be immune to contracts of indebtedness.

Lots of retirement items are also immune from lawsuits.

Before that we had debtors prisons and credit crunches every 15 years that filled them up.

Question:
Would the debtors go better next to the illegal immigrants or the pot heads?

Another question:
Would allowing one to sell oneself into slavery be a road out of the debt mess?

So many wonderful ideas…

[urbanrealtor]

Well our current system of finance allows for some items to be immune to contracts of indebtedness.

Lots of retirement items are also immune from lawsuits.

Before that we had debtors prisons and credit crunches every 15 years that filled them up.

Question:
Would the debtors go better next to the illegal immigrants or the pot heads?

Another question:
Would allowing one to sell oneself into slavery be a road out of the debt mess?

So many wonderful ideas…

[urbanrealtor]

Well our current system of finance allows for some items to be immune to contracts of indebtedness.

Lots of retirement items are also immune from lawsuits.

Before that we had debtors prisons and credit crunches every 15 years that filled them up.

Question:
Would the debtors go better next to the illegal immigrants or the pot heads?

Another question:
Would allowing one to sell oneself into slavery be a road out of the debt mess?

So many wonderful ideas…

[SK in CV]

I agree with this.

But keep in mind, that’s not what the post addressed. It says that the lender “requires” divestiture of the retirement account. That’s just BS. The lender will present a number of demands, maybe some cash, bringing property taxes current, maybe paying off some credit cards, and maybe divesting all or a portion of a retirement plan. What borrowers attempting a loan modification must keep in mind is that each and every one of their “demands” are negotiable. And depending on the circumstances, though lenders will NEVER acknowledge this, the borrower may have all the leverage.

Sometimes liquidating a retirement plan will be a horrible idea. But sometimes, not so much. If a borrower happens to have their credit intact, and has maybe $10,000 in a retirment account, and the lender is offering a significant write down of the principle loan amount, it might be worth it. But if that retirement account has $100,000 in it, or credit is already ruined, or the write down just isn’t all that much, it just doesn’t make any sense.

[SK in CV]

I agree with this.

But keep in mind, that’s not what the post addressed. It says that the lender “requires” divestiture of the retirement account. That’s just BS. The lender will present a number of demands, maybe some cash, bringing property taxes current, maybe paying off some credit cards, and maybe divesting all or a portion of a retirement plan. What borrowers attempting a loan modification must keep in mind is that each and every one of their “demands” are negotiable. And depending on the circumstances, though lenders will NEVER acknowledge this, the borrower may have all the leverage.

Sometimes liquidating a retirement plan will be a horrible idea. But sometimes, not so much. If a borrower happens to have their credit intact, and has maybe $10,000 in a retirment account, and the lender is offering a significant write down of the principle loan amount, it might be worth it. But if that retirement account has $100,000 in it, or credit is already ruined, or the write down just isn’t all that much, it just doesn’t make any sense.

[SK in CV]

I agree with this.

But keep in mind, that’s not what the post addressed. It says that the lender “requires” divestiture of the retirement account. That’s just BS. The lender will present a number of demands, maybe some cash, bringing property taxes current, maybe paying off some credit cards, and maybe divesting all or a portion of a retirement plan. What borrowers attempting a loan modification must keep in mind is that each and every one of their “demands” are negotiable. And depending on the circumstances, though lenders will NEVER acknowledge this, the borrower may have all the leverage.

Sometimes liquidating a retirement plan will be a horrible idea. But sometimes, not so much. If a borrower happens to have their credit intact, and has maybe $10,000 in a retirment account, and the lender is offering a significant write down of the principle loan amount, it might be worth it. But if that retirement account has $100,000 in it, or credit is already ruined, or the write down just isn’t all that much, it just doesn’t make any sense.

[SK in CV]

I agree with this.

But keep in mind, that’s not what the post addressed. It says that the lender “requires” divestiture of the retirement account. That’s just BS. The lender will present a number of demands, maybe some cash, bringing property taxes current, maybe paying off some credit cards, and maybe divesting all or a portion of a retirement plan. What borrowers attempting a loan modification must keep in mind is that each and every one of their “demands” are negotiable. And depending on the circumstances, though lenders will NEVER acknowledge this, the borrower may have all the leverage.

Sometimes liquidating a retirement plan will be a horrible idea. But sometimes, not so much. If a borrower happens to have their credit intact, and has maybe $10,000 in a retirment account, and the lender is offering a significant write down of the principle loan amount, it might be worth it. But if that retirement account has $100,000 in it, or credit is already ruined, or the write down just isn’t all that much, it just doesn’t make any sense.

[SK in CV]

I agree with this.

But keep in mind, that’s not what the post addressed. It says that the lender “requires” divestiture of the retirement account. That’s just BS. The lender will present a number of demands, maybe some cash, bringing property taxes current, maybe paying off some credit cards, and maybe divesting all or a portion of a retirement plan. What borrowers attempting a loan modification must keep in mind is that each and every one of their “demands” are negotiable. And depending on the circumstances, though lenders will NEVER acknowledge this, the borrower may have all the leverage.

Sometimes liquidating a retirement plan will be a horrible idea. But sometimes, not so much. If a borrower happens to have their credit intact, and has maybe $10,000 in a retirment account, and the lender is offering a significant write down of the principle loan amount, it might be worth it. But if that retirement account has $100,000 in it, or credit is already ruined, or the write down just isn’t all that much, it just doesn’t make any sense.

[CAwireman]

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……

[CAwireman]

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……

[CAwireman]

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……

[CAwireman]

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……

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