patrick.net

It's 10% penalty from my understanding...

Yes I think it's added to your AGI plus a 10% penalty.

Ok so this 20% IRS fee...total BS? I honestly have never felt like someone was trying to scam me harder than right now

You don't want to be using 401k for home purchases. It's not worth it.

You lose out on a lot of interest, you lose out on retirement, and you pay a huge penalty for withdrawing early.

To see how much borrowing from your 401k will cost you throw down an excel sheet:
Calculate the following:
From Amount you withdraw. - this is your retirement savings.
- Amount you pay in taxes.
- Amount you pay in penalties.
- Amount you will not gain from growth over X years you plan to have it. (be conservative, 3 to 4% a year).

Thats what you are trading off to withdraw early from your 401k. Also in most of the country there is a real estate bubble still slowly deflating. So whatever you put down you are basically wasting.

ChrisLosAngeles says

You don’t want to be using 401k for home purchases. It’s not worth it.
You lose out on a lot of interest, you lose out on retirement, and you pay a huge penalty for withdrawing early.
To see how much borrowing from your 401k will cost you throw down an excel sheet:

Calculate the following:

From Amount you withdraw. - this is your retirement savings.

- Amount you pay in taxes.

- Amount you pay in penalties.

- Amount you will not gain from growth over X years you plan to have it. (be conservative, 3 to 4% a year).
Thats what you are trading off to withdraw early from your 401k. Also in most of the country there is a real estate bubble still slowly deflating. So whatever you put down you are basically wasting.

ChrisLA-Did you even read the initial post? He wants to hide his money so he can get a loan mod.

OP - did your advisor comment at all about fraud?

There are many things people need to do toqualify for BS programs like this. Miss 3 payments, hide money, deed secondary properties to other people, and wipe back to front instead of front to back. Many won't even qualify even after they comply.

Wow, I'm sure glad my tax dollars are being given to scammers.

The MHA program is NOT supposed to consider 401Ks as a liquid asset so there is no need to hide it. Todd5704, if you are hell bent on gaming the system and/or committing fraud, your time would better spent over at www.loansafe.org. The losers there will be happy to help you.

Interesting that they even ask for your 401K amounts liquid or not.

Just goes to show how big of a sham everything really is.

The 401K program is the only program that you can rely on(provided you make wise fund selection) when you retire with no 100% hope of SS money when we retire.

I reread your post. Didn't realize you are trying to hide.

Dude, thats fraud and they do check. 401k transaction history data is kept permanently. In fact I'll probably forward this thread to IRS. Fraud is not ok.

Todd,

You don't need an "advisor", just read up on stuff and then you will know what decisions to make.

Another case of somebody that makes a mistake, is able to pay for it, and is looking for a way to dump his mistake on taxpayers while not sacrificing a nickel of his own money. Another "victim" of home ownership.

So, you can afford your mortgage payment and admittedly have almost $50k in your 401K acct. And your question is how do I doctor my financials so I can pretend to be a person in need and get a mortgage modification I neither need nor deserve, paid for by the very same people Im going to go to for advice on how to game the system?

Look here, and this is coming from someone who processes mortgage modifications.....if you don't need one, you don't want one. All a mortgage modification is is a way for banks to keep people who otherwise have no business holding a mortgage of that girth in the homes and paying something, anything, to prevent the bank from having to take possession of a rapidly-depreciating asset and thus incur larger losses in liquidating the property than they would if they could somehow refinance your current principal balance minus all the delinquent amounts (which they'll tack on as a balloon payment due in lump sum at the end of the mortgage) into a new 40 year mortgage with a reduced rate. This reduced rate only applies for the first 3-5 years, at which point it's back up to 5%. But that reduction in payment will not hurt the bank in the least, not when they just ensured a minimum of an additional 10 years of interest payments (and that's if you're on year 29 of a 30 year mtg...if you're 10-15 years in they just got 20-25 years more payments out of you when they extended you to a 40 year) from you by modifying your mortgage.

Look, a mortgage mod is a terrible deal for someone who needs it. For someone who doesn't need it...it's just a really short-sighted and ill-advised attempt to pay less for something you already agreed to pay a certain amount for, under some delusional notion that any or all of that debt somehow goes away. It's simple refinancing, only the term is 40 years instead of 30, and you can be underwater to get it (by decree of the US govt) rather than have existing equity and basing loan amts on limitations such as LTV ratios. If you have steady income and decent savings accumulating, why on earth you'd want to participate in this scam just because "everyone else is getting a lower payment", is beyond me.

Had you done appropriate research prior, sheer prudence and good sense would have disqualified you from the program. Beyond that, you made your bed (you agreed to the current mortgage you hold) Now lie in it.

(and as NEHOPE said, 401k is not considered liquid for MHA/HAMP, only money market accts, CDs, savings/checking accts, etc) And to tell you the truth, the way these companies are processing these things.....morality aside.....if you're trying to "hide" your assets, a simple, "I don't have a 401k account" spoken over the phone to your negotiator will suffice. The process is a joke.

And I'm sure you might come back with, "I don't intend on spending nearly 40 years in this house, so the term extension doesn't bother me in the least"

Which is all well and good, except that in that case what you're really asking is, "How do I legally doctor my financials to appear poorer than I am so I can have the government subsidize my mortgage payments with your tax dollars for a few years until I can sell this place and have the buyer pay it all off for me? That way I can pocket the difference each month...."

In that case my answer would be: GFY

I wish wish wish they only gave loan mods to 'liars with money'. Then the default rate would be super super low on these loans and the taxpayers would not lose near as much from the inevitable foreclosure.

People who cant afford a mortgage - should be renters. (its that simple and no amount of help can fix stupidANDpoor. try to help them and you become stupid/poor also...)