Hello John. While the banks can't force you to use money that is already in your retirement fund to pay your mortgage or a deficiency amount, they may question it if you are still making contributions to a 401k while you are claiming that you can't pay your mortgage. It's really the big picture that matters. If you have only $10,000 in an IRA or 401k it does not hurt your case, but if you have a $100,000 401k account, the bank may be less inclined to see a hardship depending on what other circumstances you may have. The banks are not as obsessed with the hardship factor as they used to be and they are more focused on their bottom line. Although we like to believe that the lenders have no emotions, we should not forget that the negotiators and investors are human beings that don't leave their emotions 100% out of the decisionmaking process. I wish we could say that we always know why the lenders made the decisions they made.