Anonymous Banker Weighs in on Banks Bad Advice regarding Mortgage Reductions

I’ve recently had discussions with several clients that have tried to modify their mortgage, and I was appalled at the advice they received from their lenders.  So I took a peek around the net to see what was happening in the industry.   As usual, I am appalled at the under-handed tactics of the banking industry.

 

Here is my advice.  Verify all information you receive and if it sounds “to good to be true”, believe me, it is.  Seek advice from trusted friends and business associates such as your accountant and attorney.  Or write in to me.  The banks are not to be trusted.  They are not your friends.  They are there to cover their own back first, even if it is at your expense. 

 

From the website of  “Wamu is becoming Chase”

 Other sources of payment

Your checking and savings accounts are not your only sources for making payments.

You may be able to repay your home loan using:

  • Using funds from your 401(k) account—ask your employer about making a “hardship withdrawal”.
  • Selling stocks and bonds you may own.
  • Requesting the cash value of any life insurance policies.

Before you use any of these other sources to pay your home loan, please make sure you understand any penalties or tax issues that may result.

What they fail to tell you here is that if this economic crisis forces you into bankruptcy, your 401(K) and the cash value of your life insurance policy and your IRA up to $1 Million dollars is exempt from the bankruptcy filing.  The banks can’t get their greedy hands on these funds no matter how much money you owe. 
 
If you cash-out your 401 (K), IRA or life insurance and apply these funds to your mortgage, or for that matter any of your outstanding debt such as credit card debt and then later still have to file bankruptcy, you will not have your nest-eggs to fall back on.

The absolute worst advice anyone can give you, in my opinion, is to take bankruptcy-protected assets and use them to reduce your debt in the face of this economic crisis.

The only one who could possibly benefit from you doing so, is the bank!

 

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