Bill Gives More Time to Close Tax Credit Deals
One of the frustrations we’ve been hearing from agents is that their clients want to take advantage of the home buyer tax credit but because deals are taking so long to close, mainly because of short sales, there’s a good chance they’ll miss the deadline.
That’s a concern that NAR has been sharing with members of Congress, and now we have evidence that lawmakers are taking the concern seriously.
Yesterday, Senate Majority Leader Harry Reid (D-Nev.) along with Sens. Johnny Isakson (R-Ga.) and Chistopher Dodd (D-Conn.), the Senate Banking Committee chairman, introduced legisation to extend until September 30 the closing deadline for households who have had a contract pending since April 30. Under the program as it stands today, these households have to close on their purchase by the end of this month or else lose their eligibility for the tax credits.
Two weeks ago I spoke with NAR Chief Economist Lawrence Yun and at that time he said REALTORS® were making a strong case to lawmakers that this extension is vital given how long it’s taking households to get to closing right now. He said it would be a shame if these households, through no fault of their own, missed their chance to get the credits simply because they were trying to buy a home that was on the market as a short sale.
Apparently, lawmakers are thinking along the same lines. When he introduced the proposal yesterday, Sen. Reid’s office said in a written statement something very close to that:
“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.”
NAR estimates about 180,000 households could see their chance at getting the tax credits disappear if the deadline for closing isn’t extended. What the Reid bill suggests, given its bi-partisan co-sponsorship, is that lawmakers across the board are aware of the delays caused by the large number of distressed sales in the market today and they don’t want to see home buyers penalized.
Considering the still-fragile state of the economy, taking steps to help those 180,000 households that made a good-faith effort to meet the deadline is something lawmakers clearly see as a reasonable and bipartisan accomodation to today’s short-sales climate.
