Do you think your 401K is safe? Attorneys have told me in the past that short sale lenders won’t touch your retirement money. Guess what? FALSE! Today a Bank of America negotiator asked me to have my seller liquidate HALF his retirement account to get his short sale approved.
The seller has a $400,000 loss on a property in Santa Rosa Beach, Florida. We have been in the short sale process for four months. Today the negotiator said the file will not be approved unless he liquidates half his IRA for a $70,000 contribution. She said he has “some” income, although he has lost most of it because he is in sales…. His wife was laid off last week. There are no other funds. That is irrelevent to Bank of America. His wife's name is not on the loan.
I asked the negotiator, “Why would someone agree to give up half their retirement? They could refuse, then your company will have to pursue a deficiency judgment to try to get the $70,000 after a foreclosure .” She could not answer me, and I have yet to figure out the logic. $10,000, $20,000? OK, that makes sense. But half of someone’s retirement account? I can see how a seller might “roll the dice” and say “no” to the short sale, not give up $70,000, then wait and fight after a foreclosure. It might cost them $20,000 in attorney’s fees, but they might also save $40,000, not too shabby in this economy. I say if this is a trend, many sellers will take their chances with foreclosure.
What do you think?
Wendy Rulnick, Broker, CRP, CRS, GRI, ABR Rulnick Realty, Inc.
Call toll-free 1-877-ITS-WNDY (1-877-487-9639) or local 850-650-7883 ext 204
Email Wendy to sell your home or buy a home: [email protected]
Call Wendy Rulnick, Destin real estate agent, to list and sell your home or condo on the Emerald Coast of Florida in Walton, Okaloosa and Santa Rosa County- Destin, Santa Rosa Beach, Fort Walton Beach, Niceville, Bluewater Bay, Navarre, Seagrove Beach, Watercolor, Sandestin, Seaside, Crestview, Rosemary Beach, Mary Esther, Shalimar, Eglin AFB, Hurlburt Field. Wendy is a short sale and pre-foreclosure specialist and has been featured in "Kiplinger Personal Finance Magazine" and "Florida Realtor Magazine".