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nhnp12 · Feb 12, 2011, 05:54 PM

If my second home is foreclosed on, can the bank come back and take my savings and 401K to pay the deficiency amount? The mortgage is $330,000 and the home will not sell for more than $200,000 at the most now. Also, can they garnish my wages?

ScottGem · Feb 12, 2011, 06:08 PM

Your 401(k) is safe, at least until you start withdrawing it.

But it is possible they can go after other assets to make up the shortfall. Its unlikely however, especially with current laws. The more likely scenario is forgiving the shortfall which then becomes taxable income for you.

nhnp12 · Feb 12, 2011, 07:44 PM

Thanks for such a quick response. I did not mean a 401K but an IRA (Roth), also can you tell me what a fair value jurisdiction is and how do you know if your home is in one.

Fr_Chuck · Feb 12, 2011, 07:45 PM

Can they, yes most likely, will there, currently I have not seen it being done. Of course on a second home ( different than on a main residence) the amount of difference, as Scott said will be taxable, so you will end up owing the IRS a good chunk of this.

ScottGem · Feb 13, 2011, 07:03 AM

IRA would have the same protections.

I can't find anything on "fair Value jurisdiction" Can you give us more of a context.

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