If you walk away from a mortgage, can the mortgage company attach your 401k?

Asked by , Tue Sep 6, 2011

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Kary Krismer, Agent, Renton, WA
Tue Sep 6, 2011
This is a question which calls for legal advice, and therefore the proper response is that you should consult an attorney.

That said, the second mortgage does not just disappear if the first forecloses, as claimed below, or at least that's not the most likely answer. (If the first and second are the same entity there might be an argument that the second would be wiped out too.) Also, even if there's only one mortgage, it is possible that they might judicially foreclose and pursue a deficiency (although that is not at all common). Again though, that's the reason to get legal advice from an attorney.

As to 401k accounts, that an exemption issue. Again an attorney should be consulted, but there are both state and federal exemptions which could be applicable.
1 vote
Kary Krismer, Agent, Renton, WA
Tue Sep 6, 2011
In Beal Bank v. Sarich the Washington Supreme Court ruled that liability on a note secured by a second deed of trust survives the foreclosure by the first position deed of trust. In that case, however, the second and first were different entities. Where the second is the same entity the "dragnet clause" of the deeds of trust might result in a different decision, but IMHO that's somewhat unlikely. Again, someone in this situation should consult an attorney.

You can read that decision here:

http://www.winstoncashatt.com/files/CMA-BealBank.pdf
0 votes
Jirius Isaac, Agent, Kenmore, WA
Tue Sep 6, 2011
I agree that it is always better that you get legal advice. However, that costs money & you are short on that right now. I stand by my previous answer in 99% of the cases. Again, read my blog on short sales and/or call me if you want to talk in detail.
0 votes
The Robert S…, Agent, Puyallup, WA
Tue Sep 6, 2011
no if just one loan.

If you have a second mortgage the bank MAY seek a defiency judgment.

Consult an attorney regarding judgment going after 401k.......I would believe not.

With a Short sale they will not go after a 401k either.
0 votes
Jirius Isaac, Agent, Kenmore, WA
Tue Sep 6, 2011
Your first mortgage can only foreclose in Washington State & they cannot come after you for anything. The second just disappears. The problem is that you will have a foreclosure on your record that will prevent you from buying a house for 7 years. It is far better to do a Short Sale because you can buy a house in less then a year if you do that. You can go to my blog below & see all my writing on short sales to learn more about them. Feel free to call me as well at 206-841-9976 if you need any more info.
0 votes
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