COLEMAN FIGHTS TO HELP HOMEOWNERS FACING FORECLOSURE

Posted by Minnesota Real Estate

July 4, 2008

Amendment would allow for tax-favored withdrawals from retirement savings

Washington, D.C. - Continuing his effort to address the housing crisis, Senator Norm Coleman has introduced with Senator Bill Nelson (D-FL) an amendment to the pending Senate housing legislation that would temporarily allow homeowners tax-favored withdrawals from their retirement savings in order to keep their house.

The amendment, which is based on the Senator’s Home Ownership Mortgage Emergency Act (HOME Act), would waive the ten percent penalty early retirement withdrawal penalty for homeowners who participate in a government or industry sponsored foreclosure program. Under the amendment, homeowners could withdraw up to $25,000 and receive tax-free treatment of the withdrawal if they payback the withdrawal within two years.

“The housing crisis is profoundly hurting families, communities and the economy,” said Coleman. “In Minnesota alone, we have lost nearly 7,000 construction jobs during the past year. All across Minnesota families are struggling to keep a roof over their head. While there is no one single solution to the housing crisis, this amendment offers sensible relief to homeowners. Rather then being penalized, we should make it easier for homeowners to help themselves.”

Minnesota is currently sixth in the nation in terms subprime mortgages in foreclosure. The amendment sets an income limit of $55,000 for individuals and $110,00 for joint filers. Except for very limited cases, a 10% penalty is currently applied to early retirement withdrawals, although the tax code waives this penalty for Individual Retirement Accounts (IRAs) withdrawals for first-time home purchases.

Contact(s):
Leroy Coleman, (202) 224-5641

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