Newly Proposed Foreclosure Law

Under a bill recently proposed to Congress, people who are far behind on their mortgage can withdraw from their 401(k) to save their home without paying any penalties.

According to the language in the “HOME ACT,” the proposed bill allows homeowners to withdraw money from a retirement plan penalty-free (but not tax free) to make mortgage payments toward his primary residence up to $50,000 or one-half of the present value of one’s 401(k) account (whichever is smaller). This will be allowable as long as the funds are used for that purpose within 120 days of withdrawal. This sounds like a great idea that could potentially help millions of homeowners who are behind on their payments or struggling with a recent job loss.

However, you can look at the bill another way.

The option to withdraw from a retirement plan may just be a postponement of the inevitable. It may do little or no help at all to the millions who are hopelessly underwater, and who may eventually lose their home. Is this bill really about helping the millions of American’s facing impending foreclosure? Or is this another attempt to a bailout that we, as taxpayers, will end up paying for when folks who opt into this plan will eventually need help because their retirement funds have been depleted?

What do you think? Would you ever do this, or would you prefer a Short Sale as a solution?

Ihor Pochay
BROKER/SHORT SALE & REO SPECIALIST
Team Pochay Realty
C (562) 334-7393
ihorpochay@hotmail.com
TeamPochayRealty.com
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