Is my traditional IRA safe from my mortgage company? 9 Answers as of June 10, 2013

I'm 63 and had to retire due to health issues and found out I have more. Trying to give my house back to mortgage company, I didn't want to just walk away. Can they take my traditional IRA? I paid mortgage for March which is the month I stopped working.

Ask a Local Attorney. 100% Anonymous. Free Answers.

Free Case Evaluation by a Local Lawyer: Click here
Frank Law Group, P.C.
Frank Law Group, P.C. | David E. Frank
Yes, in California your IRA is safe. You can stop paying and mortgage company will try negotiating a loan modification before foreclosing. Realistically, you'll be able to stay in your home for a year or more after you stop making payments. That can save you a lot of money.
Answer Applies to: California
Replied: 6/7/2013
Janke Legal Consulting | Bruce C. Janke
Funds contributed to IRAs are exempt "only to the extent necessary to provide for the support of the judgment debtor when the judgment debtor retires and for the support of the spouse and dependents of the judgment debtor, taking into account all resources that are likely to be available for the support of the judgment debtor when the judgment debtor retires." Code Civ. Proc. ?704.115(e). But let's back up. First, if the mortgage is a purchase money loan, the lender is limited to the remedy of foreclosure and cannot sue for any deficiency (amount by which loan balance exceeds sale price of home). Second, is your loan underwater? (house worth less than principal balance of loan). If not, then there would not be any deficiency after foreclosure for the lender to collect. In fact, the lender would have to refund to you any amount by which the foreclosure sale price exceeds the loan balance plus costs of foreclosure. If you cannot afford the home, try to negotiate with the lender for a "deed in lieu of foreclosure." This means you voluntarily sign a deed giving the home back to the lender. Banks will often pay your moving expenses, or other cash settlement, in exchange for not having to incur the expenses of the foreclosure process.
Answer Applies to: California
Replied: 6/10/2013
Joseph Lehn, Esq
Joseph Lehn, Esq | Lehn Law, PA
In Florida, IRAs are 100% exempt from creditors.
Answer Applies to: Florida
Replied: 6/7/2013
Stacy Joel Safion, Esq.
Stacy Joel Safion, Esq. | Stacy Joel Safion
I would suggest short selling your property. Your IRA is exempt.
Answer Applies to: California
Replied: 6/7/2013
Durham Jones & Pinegar | Erven Nelson
In Nevada, your IRA and other qualified retirement plans are exempt from execution (meaning safe from creditors) up to $500,000. Other states have different limits.
Answer Applies to: Nevada
Replied: 6/7/2013
    Aronoff & Linnell, PLLC | Erik C. Stein
    Generally, IRAs, 401(k)'s, and other qualified retirements accounts as defined by the IRS are exempt from collection (i.e garnishment, execution, etc). The mortgage company, can however, assess your overall financial health in making a determination as to whether or not you can be liable for deficiency on any type of deed in lieu of foreclosure or short sale. Bankruptcy may be an option to just walk away from all of the related mortgage debt. I would talk to a qualified attorney to make an assessment as to which option is best for you.
    Answer Applies to: Michigan
    Replied: 6/10/2013
    Law Office of D.L. Drain, P.A.
    Law Office of D.L. Drain, P.A. | Diane L. Drain
    It depends on the exemption laws of the state where you live. In Arizona the funds are exempt so long as they are in the IRA. Once you put them in your checking account they are no longer safe. But what you really should be asking is can the lender sue you. Arizona has an anti-deficiency statute. There are some rules about the character of the property. So, check with an attorney licensed in the state where you live.
    Answer Applies to: Arizona
    Replied: 6/7/2013
    Orrock, Popka, Fortino, Tucker & Dolen
    Orrock, Popka, Fortino, Tucker & Dolen | Myron Wayne Tucker
    Usually a mortgage company in California can only take back the property. If the loan is the loan you used to buy the property, and you default, the lender will foreclose or accept a deed in lieu of foreclosure and take title to the property. The lender is prevented from collecting any deficiency by the California anti-deficiency laws. In any collection matter, your retirement account is protected because you can claim an exemption of up to more than $1 million for those accounts.
    Answer Applies to: California
    Replied: 6/7/2013
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    The collateral for the house is the security, not your IRA.
    Answer Applies to: New York
    Replied: 6/7/2013
Click to View More Answers: