U.S. Senator Norm Coleman, R-Minn., has introduced S.2201, The Home Ownership Mortgage Emergency Act. Intended to assist delinquent mortgage borrowers, the legislation would allow troubled borrowers to make penalty-free withdrawals from their retirement accounts in order to bring their home loans current.
S. 2201 would allow borrowers to access up to $100,000 of their retirement account. The borrower will be allowed to repay the amount back into his or her retirement account over three years without incurring a penalty. The bill requires that the delinquent mortgage be on a principal residence and that the borrower must have an adjusted gross income of $114,000 or less ($166,000 or less for joint filers). The borrower must be at least 60 days behind on his or her mortgage to qualify, and the option would be available through Dec. 31, 2009.
"This is the kind of flexible, creative solution that will help many delinquent borrowers in the current market," comments Jonathan L. Kempner, president and CEO of the Mortgage Bankers Association.
"Most delinquencies are caused by an event in someone's life that puts them temporarily behind on their bills, including their monthly mortgage payment. Senator Coleman's bill will allow borrowers who have fallen behind to help themselves without being penalized by the government," he adds.