I sent the following letter to my Senators and my Congressman. I also sent a follow-up letter explaining how all of this could be accomplished. Please read this and consider sending it to your Congressman and your Senators. Just copy it out of the blog and paste it into a word document or an e-mail and send it off.
Thanx,
FoR
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The Honorable Charles Schumer
United States Senate
313 Hart Senate Office Building
Washington, D.C. 20510
Dear Senator Schumer:
With economist predicting anything from hyper-inflation and slight increases in unemployment to a full blown second recession, your constituents are afraid of losing their jobs, homes, and retirement savings. I believe that I know a way to alleviate, or at least reduce, this fear.
I would like you to consider an amendment to current tax law that would permit anyone to use their 401(k) or IRA to pay for their primary residence, without penalty. Allow them to use it as a payoff or as a larger down payment to ease refinancing and to significantly lower their mortgages and thereby their monthly mortgage payments.
For me, and others like me, it would allow us to payoff our homes and provide several benefits:
- I would not be loosing my retirement money. I would simply be investing in real estate rather than stocks.
- If a second recession should hit, I would not loose this money through my 401(k) like I did during the last recession. Many of these 401(k)’s permit you to select from a great variety of poorly managed mutual funds that are adversely impacted by minor economic factors. Why not, instead, let me invest this money in my home to secure a safe haven for my family during hard times?
- With my house paid-off, it will be much easier for my family to survive the recession should I loose my job. I will not need to worry about paying a monthly mortgage payments which currently eats up a quarter of my wage. It will also expand the number of job opportunities for me as I will be able to take a job that pays less than my current position and will more likely be able to survive on that income.
- If I do not loose my current job, once my house is paid-off I will have increased disposable income equal to my mortgage payment. Multiply this by the number of people that take advantage of this program and you have a reasonable economic stimulus plan.
- Also consider the increase in tax revenue that will become available as the mortgage interest deduction is removed for everyone that takes advantage of this program.
- If enough people have the resources to do this, it may help stabilize the housing market and slow the number of bank foreclosures.
I may be overstating the benefits to the government in points 5 & 6 but I am not overstating the benefits to me and my family. This, like most well intentioned ideas, may have unintended consequences. For example, it may cause further stock market fluctuations or there may not be many people with the appropriate resources. I think, however, for those of us that do have the resources, this will have a huge and lasting impact. Please consider introducing this to the Senate as soon as possible.
Thank you for your time and attention to this matter.
Sincerely,
