US Bank denies Short Sale - Wants Homeowner's IRA

I have been dealing with US Bank in Portland on a Short Sale. This was a small builder (only a couple homes). He does not have deep pockets.

He is in his 50's. He has taken out a second on his personal residence (which puts him upside down in this property also) to pay this loan for over a 2 years. The value has dropped to about half what it cost him to build. Loan is approximately $400K and value is about $220K.

We submitted short sale package and they denied it because he won't release his IRA (Value $37K) to them. They told him they "were going to come after him". He asked them "for what" since he has nothing left. They said his IRA. So - utimately, the house will go to foreclosure sometime next spring or summer after being vacant for over 2 years. Values here continue to drop - so they will get less than current offers. Builder may have to take out BK to stop them from getting his IRA? Private retirement accounts are protected from creditors. What are they thinking?

They even lied to the Buyer's agent - we got US Bank on the phone and they told her they had approved the short sale but the negotiator was out and they couldn't get a letter out until she got back which would have been the week of closing (Gina)...it was a lie - they said they accepted the short sale but they were actually wanting a modification - they wanted the Builder to sign another note for $200K for 5 years at about $2000 per mo. He is broke - they already got all his money. LIARS LIARS LIARS AND HORRIBLE BUSINESS PEOPLE. THEY LOST AN ADDITIONAL $50,000 OF OUR TAX PAYER MONEY BY FORECLOSING AND SELLING AT AUCTION.

10/26/2009 So the home went to Auction last week and US Bank accepted a bid from an investor for $175,000. This is nearly $45-50K less than the short sale offer that I had at the closing table when they offered a loan modification instead of a short sale. They lied to me until we got to the closing. (US Bank in Portland). We worked 6 months on the short sale. The builder had tried to sell it for nearly 2 years continuously. Now the investor has it on the market at $229,000 and has a full price offer within a week. So he will make about $40-50K.

It is crazy that we as an industry are just sitting back and watching all this happen. We haven't organized and stood up for mainstreet. We are just letting the banks do these outrageous things to each other. I live in the most conservative state in the union and our elected officials could care less. They have everything they want.