Legal Question in Real Estate Law in California

The laws on this kind of issue are very specific to the state involved. In this case the state where the property is located will almost certainly govern the answer. You have posted this as a California question, but give a Las Vegas, NV zip code. We need to know which state the property is in, or our answer could be totally wrong.

Yes, a creditor may levy a savings account which contains cash, even if it is "intended" to be saved for retirement. The only means of protecting money intended for retirement is to have funded it into a properly qualified retirement instrument, such as an IRA, 401K, 403(b), etc... At this point, you could begin making IRA contributions, but they would have to be at or below the annual limits established by the program regulations. In other words, it is too late for you to now dump that savings account fully into an IRA or 401K and protect it from creditors. Your present income has virtually nothing to do with their ability to levy against your assets to satisfy a court judgment.

One thing you need to address with a local real estate attorney is the question of whether or not a deficiency, or the possibility of a deficiency even exists. In California, even though this is a second home, if the lender pursues non-judicial foreclosure, and there is only one loan, then that lender may be barred from seeking a monetary recovery from you after the foreclosure for a deficiency. They can still sue you for "waste" if the home is damaged by you prior to foreclosure, but that is pretty rare. I would strongly encourage you to buy an hour or so of a local real estate attorney's time to determine if you have any exposure to begin with. Remember that in a short-sale, the bank is generally going to require you to continue to repay the unpaid balance, or the "short" regardless of having let the property be sold. You may be better off letting it go in foreclosure if there is no deficiency exposure.

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Answers based on California law:

By way of explanation, a "non-judicial foreclosure" means one where the lender doesn't take you into court to foreclose, but instead uses a trustee's sale.

If the lender chooses to use a trustee's sale, its recourse is limited to the collateral securing the note - probably just the second home. The lender is not and does not become a general creditor as a result of foreclosure by trustee's sale, whether or not the collateral sells for enough to pay off the loan.

A very high percentage of lender foreclosures are done by trustee's sale. Only a small percentage of lenders bother to sue for foreclosure and thus gain the possibility of recovering for a deficiency. Lenders are more likely to take you to court if (a) they think you are rich, or (b) think you fibbed on the loan application.