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June 15th, 2010 (Modified on June 29th, 2010)

Will the Homebuyer Tax Credit Cutoff Date be Extended?

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While there has been little to no chatter about lawmakers extending the homebuyer tax credit for a third time, there has been increasing talks about extending the time a borrower has to close on their deal. Under the current arrangement, to qualify for the tax credit a borrower must sign their contract by April 30 and close by June 30.

NEW POLL: Do you support the extension of the homebuyer tax credit’s closing deadline? VOTE NOW

According to the latest edition of The Kiplinger Tax Letter (June 11):

Now, Congress is eyeing an extension of the June 30 cutoff date to Sept. 30 because of reports that a number of buyers are experiencing paperwork delays that will cause them to miss the deadline. Note that lawmakers won’t expand the credit to apply to purchases after April 30.

One such borrower “experiencing paperwork delays” is our reader ‘Chris S’ who left us the following comment last week:

I had signed contact before April 30th but the bank says that because so many people rush for the deadline they are overwhelmed and are not sure that they can close by June 30th. I did everything I had to do in time and there are no open issues on my end. I’m just waiting on the bank. Why would they put a dead line of June 30th closing? They had to know the banks would get overwhelmed.

The main reason why a sixty-day deadline to close was instituted was to keep the process moving along. Lawmakers didn’t want borrowers signing contracts in April and then closing them a year later.

“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.

“Building a new home or executing a short sale in just 60 days is difficult, if not impossible.”

What We Say: We agree with extending the cutoff date past June 30 for several reasons. First off, borrowers like ‘Chris S’ who seemingly did everything right shouldn’t be penalized because of his bank’s inabilities. Secondly, there would be no added costs to extending the cutoff date: borrowers who could take advantage of the extension have already qualified in the first place.

Are you concerned you might miss the deadline? Leave us a comment, let us know!

Don’t forget to cast your vote in our latest poll!

We’ll keep you posted as we learn more about the possible extension of the cutoff date for the homebuyer tax credit.

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16 Responses to “Will the Homebuyer Tax Credit Cutoff Date be Extended?”

  1. VERA Says: June 15th, 2010 at 4:29 pm

    Same situation as Chris S above.
    The tax credit was the reason I rushed to buy a home and now I can’t close.

    It should be extended for at least two more months.

  2. Tim Manni Says: June 16th, 2010 at 8:24 am

    Thanks for commenting Vera.

    Be sure to check back in with us, we’ll update the story as soon as we hear anything more.

  3. Gerry Says: June 16th, 2010 at 9:22 am

    I think it would be great if they could extend this credit. I am in the process of building a home and will be moving into it in July, but I may not have my occupancy permit until July. In order to get the tax credit, I need to have the occupancy dated by June 30th. I actually closed on my loan in December of 2009 and have already been paying monthly payments on my construction loan and have already paid taxes and insurance premiums. I am hoping they extend the 2nd portion of this tax credit. It would allow people waiting on the banks or waiting for their home to be built to get the credit.

  4. Andy Says: June 16th, 2010 at 11:21 am

    Seems like a no-brainer to extend settlement date and give people and IRS time to process claims, since these applications were already in the pipeline and figured into the program’s cost, so should not incur any further costs to tax payers.

  5. Tim Manni Says: June 16th, 2010 at 2:12 pm

    Andy,

    Well said, thanks for commenting. Have you voted on our poll which asks “Should the closing deadline of the homebuyer tax credit be extended?”

    http://blog.hsh.com/index.php/2010/06/poll-should-the-homebuyer-tax-credits-deadline-be-extended/

    Thanks,
    Tim

  6. Tweets that mention Will the Homebuyer Tax Credit Cutoff Date be Extended? | HSH Financial News Blog -- Topsy.com Says: June 16th, 2010 at 2:57 pm

    [...] This post was mentioned on Twitter by HSH Associates and HSH Associates, Sara. Sara said: RT @hshassociates – Will Homebuyer Tax Credit Cutoff Date be Extended? http://bit.ly/d1h85E Buyers may get more time to close. June 30… [...]

  7. Stacey Says: June 16th, 2010 at 3:36 pm

    We have also been waiting for our house to close since March. We actually bought a HUD fixer-upper and bought this particular house with the idea that the $8,000 will help with almost all the remodeling we need to make it livable. My problem is not the bank, it is actually HUD that is slowing the process.

    If we do not get the tax credit, we may back out of the sale. I wonder if many other buyers will need to do the same thing. $8,000 is a good chunk of change, to lose out on it due to no fault of our own is a frustrating position.

  8. Stacey Says: June 16th, 2010 at 3:40 pm

    Oh, and does anyone know when they will reach a decision?
    Thanks!

  9. Tim Manni Says: June 16th, 2010 at 5:14 pm

    Hey Stacey,

    The latest is that the Senate approved the amendment today. The President must sign the bill before it becomes law. It should happen before the end of the month.

    Ideally, the absence of the tax credit shouldn’t be a deciding factor in whether or not you can afford to live in a home for the next couple of decades…keep that in mind.

    Click here and cast your vote on our latest poll regarding this extension!

    Thanks for commenting,
    Tim

  10. Joe Engle Says: June 17th, 2010 at 2:27 pm

    Hi Tim,

    I missed the first contract deadline of April 30th and was “penalized” because of the my banks inabilities to notice they preapproved me for too much and didn’t realize it until May 21st. I wish that I had another shot at this.

    I am also a veteran, i.e. not an active service member working overseas so I miss that extension as well.

    I’m very disappointed that I won’t get another chance.

    Joe Engle

  11. Tim Manni Says: June 17th, 2010 at 5:16 pm

    Ah Joe that’s a shame, sorry to hear that. Well hopefully you’re still qualified borrower that won’t have any trouble buying a home.

    Keep in touch,

    Tim

  12. Jason Says: June 23rd, 2010 at 6:41 pm

    Well here is my predicament. I am going through a divorce and struggled to make my last mortgage payment to keep my house from defaulting before the closing date. Well that date was May 23. Needless to say It did not close and to this date still has not closed. I could not make the next payment and now am 1 month default do the (jammed pipeline) of home buyers. I did my best to prevent this but I feel if they are giving extensions to the buyers, why dont they give extensions on defaults if the house is in escrow.

  13. Tim Manni Says: June 24th, 2010 at 2:41 pm

    Jason,

    I’m confused, by “closing date” do you mean settlement date (of your divorce)?

    First thing we suggest you do is engae your servicer — let them know you are struggling. Even before you miss a payment you should talk with them to let them know. Also, you’re not in default if you have missed just one payment, you’re 30 days late (you credit score will take a hit).

    Thanks,
    Tim

  14. Tracy Says: June 25th, 2010 at 8:17 am

    We are in jeopardy of losing our tax credit too because of Bank of America. We have been authorized to close, our buyer is ready to close and both of our banks which are local banks are ready to close. However, the third buyer who is at the beginning of the line (my buyer’s buyer) is working through Bank of America. We had all been expecting a June 18th closing and here we are a week later with no information. After speaking with my lawyer, he has additional sales that he can’t get closed also due to Bank of America.

    This stinks and if they continue to drag their feet, there are many people out there who are going to lose out even though we did the right thing to get this moving.
    I hope that there is some recourse if this does happen. I hope someone can help us all to put forth a lawsuit against this bank. This is beyond rediculous.

    It would also be nice if a bill could be passed specifically for those of us waiting to close before the 30th. The idea that they would bundle the bill with all sorts of other stuff that suits their own agenda is simply not fair to all of us. Put a bill through addressing one thing at a time. This is one of the issues with our government. Too many people trying to pull one over on all of us. Put the extra stuff aside and put the people first for a change.

  15. Tim Manni Says: June 25th, 2010 at 1:02 pm

    Tracy,

    Thanks for commenting. The idea behind including an additional amendment like the extension to an existing bill is to actually A) move the process along quicker b/c the bill has already been debated and B) to give it a better chance of passing.

    We’ll keep you posted,
    Tim

  16. Sue Smith Says: April 20th, 2011 at 7:43 pm

    Will the tax credit apply to those VA buyers purchasing a home with an FHA loan as well? Or do the need to purchase using the VA program? Thanks!

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About the HSH Blog

HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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