Update 7/1/10: They waited until the very last minute, but last night the Senate passed the stand alone bill from the House of Representatives that would extend the closing date to claim the first time home buyer tax credit from June 30th until September 30th. The measure passed the Senate unanimously and President Obama is expected to sign the bill into law today.
UPDATE 6/29/10: It appears that stand alone bills that would extend unemployment benefits and the closing date for the first time home buyer tax credit will be introduced in the house today by Rep. Sander Levin of Michigan. This is a breaking story, more to follow.
According to the National Association of Realtors, 180,000 home sales could fall apart if the $8000 first time home buyer tax credit closing date is not extended past the June 30th deadline. We have written about this topic extensively over the last several weeks, as amendments to extend the closing date for the tax credit have been approved by the Senate, only to be defeated when the bill they were attached to dies.
Many readers have commented on this site and others that they signed a purchase agreement prior to April 30th in order to claim the first time home buyer tax credit. Many of you are also having trouble closing your loan prior to June 30th, the date by which you need to close in order to claim the credit. Many people are having difficulty closing sales on distressed properties or short sales. These sales often require additional paperwork and hurdles to clear than traditional home sales. Adding to the problem is that many lenders, processors, underwriters, and servicers have been overwhelmed by the large numbers of sales that occurred right before the expiration of the credit.
Congress still has two days to pass an extension, and with luck they will find another bill to attach the extension to. Hopefully, it will be a less controversial bill than the tax extenders/unemployment extension bill that will be able to garner bipartisan support and pass quickly.
I will continue to monitor the situation and try and keep you up to date with any changes.
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Shannon Rayman
June 28, 2010 @ 10:57 am
Is there anything we can do quickly to sign a massive petition or something????? I have only one buyer that will not close in time, but even one buyer is too many. The loan is a VA loan and the builder did not finish the house until 3 days ago; which means there is no way to get the NOV and final approval and close by Wednesday. It is not the buyers fault, their offer was signed in March! We had a lot of wet weather and it was out of their control.
Thanks!
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Roberto
June 28, 2010 @ 11:48 am
This is ridiculous! I hope it does not get extended.
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Charlie
June 28, 2010 @ 1:35 pm
@Roberto No, its not quite as ridiculous as you think. Regardless of whether or not you agree with the policy the point is that a lot of people did everything properly, myself included, yet are in the position where they may not be able to collect the tax credit due to the mysterious and slothlike approval system. I signed the contract at the beginning of April and I still haven’t been able to close. The tax credit was a big incentive for me pulling the trigger on the home. If the government dangles this carrot and gets everyone to jump but then fails to understand that short sales (which are particularly abundant in this down market) take more than the usual two months, it is shortsighted on their part! It amounts to nothing more than a bait and switch for hundreds of thousands of potential home owners. By not extending this many people may back out of their deals. Judging by the spike in sales it is clear that a lot of contracts where signed in the anticipation that they could collect this credit, in an otherwise lethargic market.
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Jen
June 28, 2010 @ 2:57 pm
For people in situations like me, this really needs to be extended. I started looking for a home right after the tax credit was introduced and I would not have even looked if it wasn’t for this credit…which was the purpose of the government introducing this incentive. Over a year ago I found a home I wanted to purchase and it happened to be a short sale. To make a long story short, the bank messed up multiple times and has dragged this on, only to come through at the last moment. I will be devastated if I cannot get this credit…especially knowing that I will only miss it by a couple of days if I can’t close by the 30th. I did everything right and the bank is to blame, but because it’s a short sale I cannot go back and ask for money off the price.
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azeeman
June 28, 2010 @ 3:13 pm
if someones buys a house contigent on the 8000 credit, then they shouldnt be buying. no love lost for those who dont make the cutoff date and putting the country into further debt.
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Charles Kerley
June 28, 2010 @ 5:06 pm
A last minute IRS lien is doing its best to kill a dream. On one had they profess to be trying to help me get a tax credit while on the other hand they are trying to make it difficult for the seller to sell. If they want the seller’s proceeds then work with the title company. If they want to work with the seller then release the lien. If they continue to do nothing then it hurts us all not to mention the title company, the mortgage company and all of the other third parties that have given their time with no pay. No money moves and the economy gains nothing,
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Mark
June 28, 2010 @ 5:55 pm
Vote to extend the tax credit on BOTH of these polls! And PLEASE forward to others!
http://weblogs.baltimoresun.com/business/realestate/blog/2010/06/poll_home_buyer_tax_credit_extension_yes_or_no.html
http://blog.hsh.com/index.php/2010/06/poll-should-the-homebuyer-tax-credits-deadline-be-extended/
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estaban
June 28, 2010 @ 7:57 pm
i agree….i hope they dont pass it…..this gov bailout just brought forward a lot of sales….there really is no market except investors…and the prices are headed much lower…they are still about 20% high….
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nonymouse
June 28, 2010 @ 8:54 pm
Charlie- sorry I don’t feel bad for you. If an $8,000 credit was the only thing allowing you to buy a house, you shouldn’t buy it in the first place. It means you can’t REALLY afford it. Save yourself the grief of foreclosure later and take this as a sign from above that you aren’t supposed to buy that house.
No more free rides using MY tax dollars.
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Madison
June 28, 2010 @ 10:50 pm
Thank you for this article. I am glad to know someone still cares about the urgency in posting about this issue. This directly effects my family and I. I am more than overwhelmed with this entire process being pushed around and brushed off during this entire transation. I can’t explain how important this credit is to us, because it is simply much more than that. I would have never gotten into this market without this incentive and now it will be taken away from me because of little mistakes that were made throughout the transaction by unqualified individuals that work for lending companies. Please, If you have a heart, send emails, call, or write to officials to make the right decision for people like us.Thank you!
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roger
June 29, 2010 @ 5:55 am
Time for the realtor and housing market to stand on its own. Realtors need to stop making a living off the government’s dime.
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Nicole
June 29, 2010 @ 6:19 am
Please! Please! Please! extend the deadline.
We had our new home under contract by the first deadline, but it’s impossible for us to close by June 30th. We would’ve been under contract sooner, but the harsh winter delayed us getting the land approved to build on. We’ve done everything right. It’s been hurry, hurry to get things done for the last 2 months and now we’re going to miss the June 30th deadline by 12 days! because our new closing date is scheduled for July 12th. $8000 was a huge incentive for us to buy our first home, and now we might lose it. That’s a LOT of money and we’ve worked really hard. So, I hope they extend the deadline for our sake and the 180,000 other people in the same situation we’re in.
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Gina
June 29, 2010 @ 7:13 am
I signed my contract April 2009 & have been living in the house since June 2009, its a short sale & because there were 2 mortgages on the property when we would get one approved the other would expire.
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Paula
June 29, 2010 @ 7:28 am
I cannot believe that the deadline is tomorrow and they have not agreed to the extention. This affects so many people like ourselves and is so important to pass. The $8,000 helps get our lives back on track in so many ways. I diffently wouldn’t taken this step into purchasing a home at this time. My family would be in a mess not to mention the money we had to come up with for all the inspections and the deposit that had to be put down. Lord help us!
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Karen
June 29, 2010 @ 7:39 am
Since when did Realtors start working for the “government’s dime”? Sorry, but this Relator works hard for his money.
It’s the big banks that have so many foreclosures they can’t service them properly that’s messing everyone up.
Ten months is a ridiculous time to spend trying to get a loan closed because “big bank..B/A” doesn’t have the staff to get things done.
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Jeri Creson
June 29, 2010 @ 8:38 am
With all due respect to several of the opinions issued here – the reason we’re in this boat to begin with is a fundamental lack of understanding of the basic math that goes into the tax credit. There is virtually no expense attached to it for the taxpayers, but rather, increased tax revenues. This is a way OUT of debt for the US, not another welfare program. It is a fact, proven by the market swings before, during and now after the tax credit that a substantial number of the sales that happened would not have happened without the “security” of knowing that $8000 was there for many of the buyers. Of the estimated 180,000 transactions going to miss out on the credit A Substantial Number will Pull Out of Escrow. That’s a fact – talk to a Realtor in the middle of this right now. Do the math:
Say it’s a $300,000 sale (low to average in my area)That sale generates $18000 in commissions and and avg of $15,000 in other closing costs. That’s $33,000 in paychecks for goods and services removed from our economy spread out over several dozen people from people on one sale. Lots of people get a piece of the pie. At a 25% tax rate thats $8250 in tax revenue removed from the economy. See, instantly it’s almost paid for already. Now, those people take their paychecks totaling $33,000 and pay for more goods and services, and the people receiving that money pay taxes…. It’s a tax GENERATING policy – this is not just a corporate handout that pays for 7 elite members to buy new ferraris…that sort of thing has to stop – Please know the difference between solid policy and waste. This is GOOD for America and we need our Congress to understand that we KNOW this and ORDER them to vote accordingly.
IMHO
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JoAnn
June 29, 2010 @ 12:22 pm
I too had my contract signed in time and its a short sale. this house was already almost sold once and they buyers backed out. So instead of using all that info which we were the backup so it was instant change over. They started all over! Alot of wasted time and Money and now because this bank thought it was necessary to start over we might not make the deadline. The economy has been tough on us and the Tax Credit would be a Huge help. Just think if everyone backs out the deficit would only get worse.
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Tim
June 29, 2010 @ 12:34 pm
I was set to close last week and had everything in place, I’m working on FHA loan as I don’t want to pull out of 401K to put more down. The appraisor found a spot of pealing paint on the deck handrail that has to be fixed and it screwed up my closing date of June 25th.
This is absolutely rediculous if congress doesn’t extend this. I truly feel sorry for anyone else in my situation. I’m not in a situation where I made the decision to purchase based on the 8000 credit, but it would be awful shame to lose out on it because of a spot of chipped paint on a deck hand rail.
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Bill Kidwell
June 30, 2010 @ 8:00 pm
It is unfortunate that a promised benefit is withdrawn because of procedural issues. By the way that is what you riskwhen you depend so heaviliy on our governemnt. However, what is more curious is that if there are 180,000 home buyers ready to close why would the deal fall apart just because a nominal future credit is no longr available. Except for those few cases where a local agency has allowed the credit or a protion of it to be avaialable for closing, it seems disingenuous of the buyer to abandon a transaction just because a credit due in the futre is removed when the credit represents such a small percetage of cost. After all it is thier “Dream” or so we’ve all been told, isn’t it?
Of course the promise should have been delivered on, but abandoning the transaction just because it is not avialable seems even more “wrong”.
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