Extension of Tax Credit Closing Deadline in the Works
By: Carrie Bay
Senate Majority Leader Harry Reid (D-Nevada) wants to tack three extra months onto the closing deadline of the homebuyer tax credit, in order to ensure buyers who have already signed contracts are able to take advantage of the federal tax break.
Reid, along with Sens. Christopher Dodd (D-Connecticut) and Johnny Isakson (R-Georgia), has introduced an amendment to a jobs and tax bill currently under consideration by the Senate that would extend the tax credit deadline for closing on a home purchase to September 30. The current deadline is June 30.
There is growing concern that because of the time it takes for banks to complete transactions such as short sales, many qualifying home purchases will not be closed by the June deadline, even though buyers have worked to meet all other parameters of the tax credit, including being under contract by April 30.
The National Association of Realtors (NAR) says some 180,000 homebuyers who signed contracts in time will not be able to make the June 30 closing deadline. Approximately 75,000 of those are buyers of distressed properties.
NAR says its members have reported that as many as one-third of qualified applicants have already been notified by lenders that their mortgages will not close before June 30, due to the sheer volume of applications in the pipeline.
“NAR commends these senators for their attentiveness and sensitivity to thousands of qualified home purchasers, who through no fault of their own, are not able to meet the [existing] closing deadline,” said NAR President Vicki Cox Golder. “These are not buyers who just entered into the market. These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a work-flow jam.”
Golder stressed that the amendment does not extend the deadline for homebuyers to qualify for the tax credit – $8,000 for first-time buyers and $6,500 for current homeowners – but simply extends the deadline for closing a transaction already in process.
She also noted that since these applications were already in the pipeline and figured into the program’s cost, the extension of the closing deadline should not incur any further government costs.
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