HS to buy house-what if closing falls thru?

[doombuggy]

Participant requested a hardship earlier this month. Today he contacted out distribution administrator to tell her that the sale might not go through as the current owner found out the property had a lien on it (from a prior owner I guess) and current owner doesn't want to pay/might not show up to the closing today.

Do, if participant doesn't close on this house, what should he do with his h/s distribution? Taxes have been paid on the disbursement and MassMutual sent the money to his bank account. If the closing doesn't go through today, the participant will continue to look to purchase another primary residence.

Thoughts?

[GMK]

Maybe this helps:

http://benefitslink.com/boards/index.php/topic/50728-wants-to-reverse-the-hardship-distribution/