Replies to This Discussion

Permalink Reply by Thom Colby CA Brkr 888-391-5245 on February 25, 2011 at 7:47am

Mike -

I hadn't heard of this but I'm not surprised if they have made this policy change.  MANY closings are held up because the Buyer underestimated the time it took to cash out / borrow from the 401k.  If the Buyer is planning to "Borrow" and not "Cash Out" - that could also have an effect on their DTI in qualifying for the mortgage.

 

In 2011 all of the banks / servicers are looking for ways to tighten-up / eliminate any cause for not closing on time.

 

Best of luck,

Thom Colby

Broker / Negotiator

Newport Beach CA

Permalink Reply by Alan Remigio on February 25, 2011 at 8:48am

The climate and rules for all lenders are changing daily. Continue to look for solutions to your challenges. I would approach this situation in the following...Is this an investment or a buyer/occupant sale? If it is an investment, ask your broker to suggest a financial advisor who can, after reviewing your clients finances and counseling that person on the guidelines to the creating the IRA, place the funds in a self directed IRA and not risk the penalty for early withdrawal from the 401k.  It could be a money market fund with check writing privileges. Otherwise,  transactional funding may be your next course of action to gain approval. Bottom line for you...assure yourself that this person will close, with or without the 401k. Some of us use the retirement accounts to show assets and ability to pay. At closing, we may use an alternative opportunity to fund the deal.