I am in the process of a traditional mod. I am waiting for an answer.
Will they make me pay back the 21k from my 401k?
Mortgage Loan Modification Answer:
by Loan Modification Expert - Dan North
Your lender can not force you to use your retirement funds to make your mortgage current.
Under the Making Home Affordable Modification Program retirement funds are not included in your liquid assets available for bringing your mortgage current.
Do Not Spend Your Retirement Funds To Bring Your Mortgage Current
I do not advise spending your retirement funds to bring your mortgage current.
I have seen to many people spend all of their retirment funds trying to save their home, left with a big tax bill from early withdrawl and losing their home anyway.
There can be an exception to this depending on your age and the reasonable expectation that you can replace those funds before retirement or they would be in a better financial position by keeping their home and could reasonably afford the monthly mortgage payments without continually going into retirement funds.
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