Bad News for Homebuyer Tax Credit’s Closing Extensionby Tim Manni
Late last week the Senate failed to secure enough votes to push through a bill that would not only extend unemployment benefits, but would also extend the closing deadline for borrowers looking to take advantage of the homebuyer tax credit.
The way it stands now, this Wednesday (June 30) looks to be the official end of the homebuyer tax credit.
Earlier this month, lawmakers approved an amendment to an existing bill that added a provision that would have extended the closing deadline from June 30 to September 30. There were several reasons why many, including us, believed the bill would end up on the president’s desk before Wednesday:
1) The amendment was quite simple in nature. “All [the measure] does is take the existing law and scratch out June 30 and put in September 30,” said Lucien Salvant, a spokesman for the National Association of Realtors.
2) The tax credit amendment was attached to a much larger unemployment bill. Within the last year or so, lawmakers have tended to act quickly in order to pass bills that support the unemployed.
3) It’s wrong to penalize borrowers. The way we see it, why should a borrower be penalized (by missing out on the tax credit) because of their bank’s inability to get to their loan closed in time?
4) There are no added costs to extending the cutoff date. Borrowers who could take advantage of the extension have already qualified in the first place.
We understand the magnitude of this inaction quite well. Many of you have written in extensively — some of you building, some of you buying — explaining that the June 30 deadline just didn’t provide a realistic amount of time to close.
“Sixty days isn’t really a lot of time to close your deal. Especially if the banks are swamped, or if there’s even a small snag, the process can easily be delayed,” explained HSH.com’s VP Keith Gumbinger.
According to our poll (as of 11:50 a.m., 06/28/10), 74% of respondents said they support the extension because they wouldn’t qualify without it. Another 12% said that while they didn’t need the extension, they still supported it. Eleven percent felt as though borrowers have had long enough.
The National Association of Realtors, who began calling for this extension only a few weeks ago, gave their prediction of how many borrowers would miss out on the tax credit if there was no extension:
The National Association of Realtors said that as many as 180,000 contracts that were signed by April 30 might miss the June 30 closing deadline. But it is unclear how many of those sales won’t happen as a result of missing the tax credit.
Be sure to vote on our poll and leave us a comment explaining what you think about the Senate’s lack of action.