Senator's bill allows 401(k) money for saving homes
Schahrzad Berkland
2 Comments
Minnesota Senator Norm Coleman announces a bill to help homeowners avoid foreclosure. I only wonder how many people facing foreclosure have $100,000 saved in their 401(k)s and are able to repay it within 3 years. Plus, the extra $100K in income will working people into a higher tax bracket, and could wipe out half that money.
(hat tip to OCbear, Market ticker forum)
October 19th, 2007 - Washington DC - In an effort to provide relief to homeowners who are facing foreclosure due to difficulty with their mortgage payments, Senator Norm Coleman yesterday introduced the Home Ownership Mortgage Emergency Act (HOME Act). The HOME Act would allow homeowners who are 60 days late in their mortgage payments to withdraw penalty-free up to $100,000 from their retirement accounts through 2009 for the purpose of refinancing into an affordable mortgage or avoid foreclosure. Except for very limited cases, a 10% penalty is currently applied to early retirement distributions, although the tax code waives this penalty for distributions from Individual Retirement Accounts (IRAs) for first-time home purchases. The HOME Act would make withdrawals for the purpose of refinancing or avoiding foreclosure penalty-free as well, as long as they are paid back within three years. Senator Mel Martinez (R-FL), former Secretary of Housing and Urban Development, is a cosponsor.
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Reader Comments (2)
OMG, let the robbing of Peter to pay Paul continue.
Hey, maybe the government is thinking it would be great idea to get that money out into the economy doing 'good'--feeding consumerism to prop up the economy. Need more plasmas, BMW leasing, etc.
The politicians are freaking out. Their constituents are complaining loud, the impact on neighborhoods and communities is getting worse, and the slowdown in housing will lead to a Big Deep Recession. As politicans, they want to do something.
What would you do? I would try to help, too. I'd probably help by explaining this is a normal process of recovery.