Dispatches from the housing meltdown
Now don't let that terminology fool you. It's not some sort of special program under which you can avoid the taxes and penalties if hard times befall you. As one personal-finance website explains:
The following items are considered by the IRS as acceptable reasons for a hardship withdrawal:
- Un-reimbursed medical expenses for you, your spouse, or dependents.
- Purchase of an employee's principal residence.
of college tuition and related educational costs such as room and board
for the next 12 months for you, your spouse, dependents, or children
who are no longer dependents.
- Payments necessary to prevent eviction of you from your home, or foreclosure on the mortgage of your principal residence.
- For funeral expenses and repair of a primary residence.
withdrawals are subject to income tax and, if you are not at least 59½
years of age, the 10% withdrawal penalty. You do not have to pay the
withdrawal amount back.
Hardship withdrawals are up 23% at Merrill Lynch compared to a year ago, 20% at Great-West Retirement Services.
Elsewhere, USA Today notes that city governments are complaining about the fallout of the housing crisis at this week's meeting of the National League of Cities — falling tax revenue, rising crime, more vacant properties attracting vandals.
And in Chicago, one high-rise condo development has logged a staggering number of foreclosures:
In Chicago, one 50-story high-rise, “The Sterling Private
Residences” at 345 N. LaSalle St., has earned the dubious distinction
of being the city’s “foreclosure capital,” according to an article on Crain’s ChicagoBusiness.com.
Within the past three years, lenders have filed 95 foreclosure suits
— for loans totaling $40 million — for units in the building, a large
number of which are investor-owned, Crain’s says. About one-third of
the suits involve defendants who own several units in the building, the
I distinctly remember when I lived in Chicago I heard extensive
advertising for this building on talk radio. It was mid-2001 and Chicago's real estate market was already red-hot, even before Greenspan's post-9/11 rate-slashing campaign. From a distance of nearly seven years, it seems almost surreal.
Now let's drill down into the numbers: Consider there are 389 units in the building. 95 lawsuits, with roughly one-third of them involving more than one unit, means that at least a third of the units are in foreclosure. Ouch!
With absolutely no facts to back it up, the article asserts the building's long-term future looks bright. I don't know how that can be the case, given the immense overbuilding of condos in the River North neighborhood (just north of the Loop) that's taken place since the Sterling was thrown up.