Do NOT Take Out Retirement Funds to Cover Mortgage Payments!

You Are Screwing Yourself!

"A survey by the Greater Georgia Counseling service found that 29.6 percent of people who called the nonprofit agency for foreclosure prevention counseling received an early distribution from their 401(k) or other retirement plan within the six months prior to contacting the agency.

The fact that people are taking early withdrawals and falling behind on their bills again indicates they only got a temporary solution to their problem,” said Suzanne Boas, president of CCCS of Greater Atlanta."

Also, as the quote says, they fell behind anyway, therefore they will probably end up losing the home and their retirement funds.

Over 90% of respondents were younger than 59 1/2 meaning that they lost 35-45% of the withdrawn funds to early withdrawal penalties and income taxes! Wow, what a blow.

But that is not the worst of it. Assuming the average age of the respondents was 40, they would forfeit a quarter century or more of tax deferred growth on the withdrawn funds, which most likely could never be recovered.

Let me say it again. Wall St has said that Banks are too big to fail, homeowners are too small to Bail!

There ain't no bailout for you Bub! The Fed does not seem to want Obama to offer true relief for the homeowners, which would be a government purchase of mortgages at 80% of the current value of the home and recasting a new 30 year mortgage at that value.

This would certainly make the homeowner's mortgage payments much more affordable as well as eliminate the ridiculous Bubble Premium many homeowners are suffering under. And Please! Don't give me any "irresponsible homeowner" crap! This has to be a universal solution. There is NO Group more irresponsible and undeserving of a bailout, let alone Million dollar bonuses than the banks that created the problem in the 1st place!

Such a solution would stabilize the consumer, allowing them to start spending again and although the banks would get a well deserved spanking in terms of getting less than face value for their mortgages, it would flush out the toxic securities, appropriately disciplining the stock holders and bond holders and allow the rebuilding process to begin. Government support of insolvent banks only prolongs the problem and increases its severity.

My advice to homeowners in homes that are underwater, who cannot afford their mortgage payments, is to STOP paying your mortgage; stay in your home and husband what cash you can to make a clean start.

You don't want to lose your home, you say? You lost it when you signed the mortgage papers. You probably were not represented by an attorney. The loss of your home is the price you pay for that folly.

What about the Moral Hazzard, wu wu! When I was a kid growing up in the streets of Bed Stuy, we learned the lessons of Self Defense. If someone hit you, you hit them back!

The Fed triggered this mess by flooding the banks and the economy with excess credit, which is their classic way to kick off a recession or in some cases like now and 1930, a depression.

The banks and brokers then shoveled the money out to whoever had a pulse, in abject violation of their rules and regulations.

Wall St then did their part in the scheme, securitizing, insuring (for cash in violation of their rules and possibly the law) and leveraging, (with the help of relaxed government regulations) the bad mortgages to Stratoshperic heights, while collecting ungodly profits at every stage. About $13 Trillion in mortgages were pumped up to over $200 Trillion in garbage backed securities.

So tell me again who is acting irresponsibly and who is acting in self defense?

Banks now are refusing to foreclose on delinquent homeowners across the country because they are choking on those toxic loans they made, sort of poetic justice; so you may find that you will be able to stay in your home a lot longer than you think, especially if you live in a mortgage state.

In fact, when you are served with the foreclosure papers, the Notice of Default, or Lis Pendans, contact me. I may be able to help you negotiate with the bank. We find that in about 40% of the cases, we can negotiate a much lower payment because we know where to put the pressure on the banks.

YOU MUST BAIL OUT YOURSELF!