I learnt that if you are foreclosing the bank cannot put a lien in your 401K. Is it the same for IRA and Roth IRA as well? Can the bank put a lien on your IRA or Roth IRA if you have to foreclose?

The bank can not go after your retirement funds or any other assets after a foreclosure unless they get a deficiency judgment against you. For this to happen, a number of other requirements need to be met.

First, your state has to allow deficiency judgments. The bank can't get one against you if the state foreclosure laws do not allow it. Look up your state laws to make sure.

Second, the property will have to sell at auction for less than the total amount you owe. Of course, with tons of interest, late fees, attorney and court costs, the bank has probably added tens of thousands of dollars to your balance. It's pretty much a given that the house will sell for less than what you currently owe.

Third, even if the state allows it and the property sells for a low enough value, the bank will still have to initiate another lawsuit against you. They have to prove that the property sold for too little and that you now owe them more money. After they have already lost money on the original foreclosure, it is probably not worth it for them to sue you again.

But even if they do all this, they still can not go after your retirement assets -- that includes 401(k), 403(b), and IRA accounts. These are protected from your creditors attempts to seize them. The bank will have to try and go after your personal bank accounts or your wages or any other assets you might still own.

So, practically, the bank will not be able to target your retirement accounts, even if they are held in an IRA. And even though they can try and go after your other assets, there's a good chance that you aren't worth enough for them to use the time and resources to get another judgment against you. If the house went into foreclosure and was auctioned, they didn't get anything from that judgment -- so why would they waste time spending more money to get another one?

They won't.

Hope that helps.
ForeclosureFish