Last Updated Jun 29, 2010 4:58 PM EDT
How many people signed contracts by April 30 to buy a home before the home buyer tax credits expired? Perhaps too many.
Apparently, mortgage lenders are being crushed by demand to close on these loans by June 30, which is the date the home buyer tax credits expire.
Normally, it wouldn't take more than two months to close on your loan. But, we're not in normal times. In the new world of mortgage finance, where every bit of information must be verified and reverified, and appraisers are stuck with the Home Valuation Code of Conduct (HVCC), everything is taking much longer to do and closing times are being stretched out.
But the way the tax credit legislation was originally structured, if you don't close by June 30, then you're out of luck.
The National Association of Realtors (NAR) says that as many as 180,000 buyers who signed valid contracts by April 30 may not be able to close by June 30 because their lenders are unable to process the loans fast enough. Bye-bye tax credits.
Senate Majority Leader Harry Reid (D-Nev), who is in an extremely tough reelection campaign must be worrying about the backlash of tens of thousands of unhappy voters who can't get their home buyer tax credits, because he coauthored a proposal yesterday that would extend the time a home buyer would have to close on their home and still collect a home buyer tax credit until November 30.
Here's the press release from the Senator's site:
Nevada Senator Harry Reid today joined with Senators Johnny Isaakson of Georgia and Chris Dodd of Connecticut to introduce an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 that would extend the deadline for closing home purchases in order to qualify for the first time homebuyer tax credit. The current deadline for purchases made using the popular tax credit is June 30, 2010. There is growing concern that because of the time it takes for banks to complete transactions such as short sales, many of these home purchases would not be complete before the deadline through no fault of the homebuyer. The Reid, Isaakson and Dodd amendment would extend the deadline to September 30, 2010, to ensure the completion of the sales.
"The first time homebuyer tax credit was very popular and successful in Nevada," Reid said. "In addition to making it easier for thousands of Nevadans to purchase their first home, it helped reduce the sitting inventory of homes. By extending the transaction deadline, we can ensure that everyone taking advantage of this credit can complete the purchase of their new home."The Washington Post reports that the Senator and his co-sponsors (bi-partisan, natch) are hoping to attach the measure to a separate measure that would extend other tax breaks and emergency unemployment funds.
But, it's almost time for the summer recess. Will the home buyer tax credit finale be delayed one more time?
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- 2010 Will Start With Strong Home Sales. But What Happens After The Home Buyer Tax Credits End?
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She blogs about money and real estate at ThinkGlink.com.