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June 25, 2010

Home buyer tax credit extension bill fails

The grab-bag bill many home buyers have been on tenterhooks about -- because it had an amendment extending the closing deadline for the $8,000 federal tax credit -- is officially dead.

Supporters in the Senate have given up trying to pass the American Jobs and Closing Tax Loopholes Act, so the deadline to settle on a tax-credit deals remains June 30. The Senate had approved an amendment to the bill that would had tacked on an extra three months for the estimated 100,000-plus buyers who are still waiting for paperwork to go through.

Lucien Salvant, a spokesman for the National Association of Realtors, said the measure might still come to be through another bill. But with just a few days left, "it's coming right down to the wire."

"The anxiety level among home buyers who have to wait to close ... is very high," he said.

If Congress decides to pass an extension in, say, July and make it retroactive, some of these deals might have already fallen apart in the meantime, Salvant noted. 

 

Comments

Wow, good news for once!

Why would I move forward with my contract now. I put myself in this position for a tax credit incenitive.

We need this extension. I have been sitting is escrow for months, with no fault of my own. The banks are holding everything up. Is there anything else we can do???????

HUD is a joke, our loan documents have been at escrow (GBS a gov't contractor who is the only escrow office HUD will use in WA) since Monday. GBS says they won't even look at the file until July. Since we went under contract interest rates have fallen. Without the $8000.00 incentive there is no reason to close. Home values will continue to fall, especially without the tax credit. I think we'll opt to back out and try and get a better deal... I'm sure we'll end up saving over $8,000 by finding a better deal, and likely won't be waisting our time with HUD again.

When will the Democrats FOLLOW THEIR OWN laws that they JUST passed?

PAY-GO calls fro any spending to be offset by cuts or tax increases!

When they passed that DID THEY JUST LIE TO US?

Of course they lied to us, they're politicians. The Democrats attached this to a bill they knew was going to lose (they couldn't even get all of their own to vote for it). They needed something else to blame on the Republicans. They think this just sealed another 360,000 votes for them. I hope those losing out on the tax credit aren't that stupid.

sigh... I wish they would pass just the extension. I commented on a previous article about this, but we are just waiting on the underwriters- we've had loan approval for 2 weeks, and the lender though we would have plenty of time. Now we're holding our breath, hoping the underwriters finish on time. We'll still go through with the purchase, because we were planning on buying anyway, but we would have taken our time up to this point if we didn't think we were going to get the $8,000. If it all works out, then we'll be very happy...but we're not optimistic at this point.
It will just be sad if we re-scheduled meetings, rushed from classes to get places, and messed up our lab schedules (we're grad students) just to get this all done earlier this month...and then not get the tax credit. Oh well, that's the way it goes sometimes

I have been approved for 2 months now. I've had the lender call me 3 times to say everything is in order and that we are set to close. It's been 25 days since I was suppose to close and the regional manager calls me today profusely apologizing that we probably can't close until Tuesday! This is the 5th postponement. I don't believe a word he says and will never ever bank with a large bank again. If this doesn't close by Wednesday, I am suing for my escrow money that I will lose because of their incompetence. Heed my words people...if you want a loan...use a small town institution. Stay away from Bank of America or any national name...because they honestly DO NOT CARE about you as a client.

I'm still going to buy the house I've been backlogged on for three months now, when we signed the contract. But that money was to be a huge portion of what we were hoping to use to furnish it. Way to go lagging banks congress and slow as molasses banks! I don't know who I hate more right now.

@ Allison, we thought we had plenty of time too when we signed 93 days ago. Who knew?

Our contract expires on June 30th, if we can't close by Wednesday, we will not renew the existing contract. I will make an offer at least $5000 less than the present contracted price. The selling bank (B of A) needs to realize that they will be stuck with a bunch of houses in a very depressed real estate market. May and June have been record lows for new contracts and the numbers are getting worse by the day. The Democrats also need to realize that Nov 2nd will be their judgment day, and this latest failure sure isn't doing them any favors.

This was bound to happen. People think that they should get the extension when there was already an extension from November. It is no one's fault but your own for not getting it done in a timely manner. Waiting for the last minute has its risks. Those that have been waiting in limbo for months and months have no one but to blame but themselves, their Realtor, and the bank. When you put in a contract that is a short sale, you should know that it could take a long time to get the approval and there is never a guarantee the bank will accept. This is why REO's is the safest purchase. The bank has already approved the price and there is less of a fall out.

For those of you who only were buying because of the tax credit, I would withdraw immediately and cut your losses. Even if you lose your deposit, it is better than buying a home you won't be able to afford because of the tax credit. I am sure not everyone was relying on the credit to buy a home. But, if you are in that boat, I would not go through with it. It is not too late to change your mind.

Those that withdraw their offer will most likely be able to buy at lower prices if you wait and search patiently. There will probably be about a 50% fall out rate for those who are not able to get the credit and had a contract in. This will push more homes back on the market and increase the supply once again. Expect prices to fall another 5% to 10% by the end of the year.

This one SHOULD be blamed on Republicans. They are not interested in cutting taxes, they are interested only on protecting their rich buddies (like BP). We voted for change and the fear-mongering Republicans are blocking it. They need to be voted out. They used the same tactics in the 80's and it was the DEMOCRATIC Clinton Admin that eliminated the Reagan debt. Republicans are the problem -- not the solution

People get on my nerves. I am NOT buying a house that I can not afford. I did everything I was supposed to. I am not buying a short sale either, and I am still stuck in a lag. Now I will miss the tax deadline and miss out on one of the main reasons I bought a house at this time. I mean, that is what it was for right??? to incentivize. It sucks. And republicans should be ashamed of themselves. Not only because of this but more importantly because they allowed millions of unemployed people to go without to remain political obstacles.

Metzger has no idea or clue what they are talking about. It's to extend the deadline for the BANKS to get their paperwork done. I'm still waiting because I am buying a short-sale that's been tied up because of the BANKS since January.

Metzger is wrong... A lot of us have had contracts in on houses for months. I am doing a short sale and I had a contract in in DECEMBER! It's been the bank who is stalling on this.

Last night, I heard that one of the investors who holds the bond of which the original mortgage was part, wants to approve my contract, which the bank has accepted. The investor could be China, a pension fund, or something like that.

I knew that the short sale would take a long time, and I've done everything I've been asked. It's a house that I fell in love with at a great price in a neighbourhood where I want to live.

It's so frustrating to be going through this.

word verification: six months! hahahaha

Not only is Metzger wrong, Tired of the GOP is obviously delusional. As an amendment this extension passed the Senate easily with many Republican votes. But the Democrats attached it to a bill they knew would lose (it had lost 3 times previously, and well should have lost because the Democrats, as usual, had no plan on how to pay for the bill which would have added $66 billion to the $4 trillion deficit.). The Democrats could have easily attached this to a winner or passed it easily as a separate legislation. They needed one more thing to blame on the Republicans. All the Democrats need to do is to put this on some other bill or pass it as a separate bill by Wednesday. Will they???

To those of you who have been in limbo for months due to short sales, I am sorry you have had such a horrible experience. Your Realtor should have advised you what the risks/consequences would be for putting in a contract for a potential short sale that had not been approved by the bank PRIOR to the listing. It is the Realtor's responsibility to let you know that it can be a long, drawn out process. There is no guarantee the lender will even accept the short sale offer.

You have been waiting six months to get the house and still have not had the approval for the sale. I am sorry that it has taken so long, but you can't expect to have an extension just because you choose to purchase a potential short sale. If you wanted a guarantee of receiving the credit, you should have gone after an REO or a regular resale (non-distress). The tax credit has been in place for over a year. You can't make everyone happy. If they were to extend the credit, there would probably be people who still would not have closed on time. At that point, why not just allow everyone who had a contract in by April 30th unlimited time to get their deal done? The credit allowed a 2 month overlay to get the loan closed.

Again, I am sorry your experience on short sales has been horrific. It would be much easier if the banks were able to get things done in a timely manner. Unfortunately, that's not the way it works. Your Realtor should have told you this could have happened. You even could have put in a back up offer on another home just in case.

You rely on "experts" to give you advice and do the right thing. You won't always get the right advice and sometimes, the right advice is not what you want to hear. If the tax credit was not the motive or incentive for you to buy, then it should not matter if it expires. Surely, you can be disappointed and angry that you are going to be left out. But don't let the fact that the credit has already been extended and in place for over a year make you angry because they won't extend it again.

Surfing all the sites today to see how other people in the same situation...short sale hell...are coping. I see some of the same names from other sites so many are doing the same. When I thought the tax credit would be extended, I signed an extension on my contract extending it from 6/30 to 7/31. Not sure if my realtor faxed it over or not. How dumb am I. Calling my realtor now to see if she faxed the form. I agree with an earlier comment that I would like to offer $5,000 less if the deal closes after 6/30.

I agree with pigtown design. Instead of making it easy, the Democrats attached it to a bad bill. Politics as usual! They know if the bill fails, they can blame the Republicans for making the economy worse. And of course if they win, they love to take credit of this achievement, even though the bill would add billions to the trillion deficits. They are trying to put the Republican in the difficult position. Why can’t they simply put this amendment into a separate bill? At the end of the day, people like us are always the victims of dirty politics.

gv, you're actually agreeing with Robert. Commenters' names appear below their comment rather than above.

Metzger.... My realtor, and my brother who is a mortgage banker, both told me that it might not happen. I understood the risks when I started the process, but was optomistic that it would work out.

I can afford the house with or without the $8k, but it will come in very handy to do some work on the house, buy some furnishings and spruce up the garden, which has been languishing for two years now.

Without that money, I will do less work on the house and put less money back into the economy.

Yes, the $8k was an incentive to buy now... why wouldn't it be?

Why do people think that this is a new thing that will add to the debt? These are all deals that should have closed on time. They obviously came up with a cost of extending it to April 30th to be under contract. But now, that cost is going to be less, because many of the deals that were signed by April 30th will not qualify for the tax credit because the banks are swamped and cannot close on time.

This is almost like bait and switch advertising. Say there is a tax credit, but give too short of a time for people to actually close their deals. So you get the people buying houses on the promise of getting the tax credit, and then say sorry, you did everything you were supposed to, but we did not really want you to get the tax credit anyway.

To the person that suggested that they should just let everyone that was under contract by April 30th qualify, regardless of when they close, I say that is a good idea. That is the way it should have been in the first place.

There are alot of people who heard about the tax credit and decided to buy a home for the first time. The credit was a motivation to buy ahome as in my case. I need this tax credit to offset repairs which will further contribute to the economy.

You're right Jamie. My apology.

I have been in contract since February 2010 and I still am not ready to close and it is all because of the short sale bank that owns it!! They are trying to get more money than what the place has appraised at - don't think I will close in a few days to get the June 30th deadline - I really need this tax credit as that is what I was looking for - I mean really it's taking this long for me, I can only imagine what is it taking people who had contracts in by April.

Pigtown, sorry to hear that you will need to do repairs on your short sale and may not be able to do what you like now that the credit will expire. If I were you, I would ask your brother about doing a 203k Streamline so you can get money for repairs. If you won't close in time, that is the best alternative to get the cash out for you do all the repairs you need.

Jim in Auburn, I did not say that the credit should be extended indefinitely for those who had their contract in by the deadline. I was giving an example of why it should not be extended. The fact remains that even if it were extended an additional two months, for some people, that still would not be enough time. You can't make everyone happy. It is a shame that some people will not be able to take advantage of the credit. There obviously was a mad rush to get the contract in at the end. Thousands of people are in the same boat.

PLEASE, PLEASE, PLEASE, people......don't just post comments here!! Write your Senators and Congressmen!!! This needs to be a stand-alone bill!! I am so tired of being a responsible citizen and getting no breaks, while those who overspend, live beyond their means, declare bankruptcy, etc etc, get bailed out (at OUR expense)!!

Please, write respectful but forceful letters to your state and national representatives!! Even if there is only the tiniest glimmer of hope this could still get pushed through on its own, we have to do whatever we can to keep that hope alive!

The vast majority of americans have no interest in subsidizing your home purchase. The less people that purpetrate this fraud on the taxpayer, the better!

For those of you Democrats and Republicans who insist on bashing each other over the failure of this bill....THIS is the reason to VOTE OUT ALL ENCUMBENTS IN NOVEMBER. BOTH Parties use the same tactics for political favor (e.g. putting together a bill that they KNOW will not pass so that THEY look good without offering anything that has a snowball's chance in hell of passing.) The Republicans did the SAME THING with the Stimulus Bill, only THEY voted AGAINST it after loading it up with pork projects in their own respective districts because THEY KNEW IT WOULD PASS WITH THE DEMOCRATIC VOTES ALONE. Career-Politicians are the scum of the earth and must ALL be replaced....

Guys, I've been under contract since last November and I've now missed 2 tax credit extensions but I hope you all can look at the bright side of this like I am. If you've been clamoring for the tax credit you may have paid too much for a house just to get it. I know in my case I'll now get the property for 60k less OR MORE than my original offer and that's WAY BETTER than some lame 8k credit.

If I was most of you I'd back out of your current deal and be sure to let them know why. BECAUSE THEY TOOK TOO LONG AND THE MARKET IS STILL DROPPING RAPIDLY IN PRICE! And I'm glad, kiss my middle class arse you corrupted banking institutions and mortgage companies! :)

I am thrilled this waste of money has not passed, and I know many many others who feel the same as me - in fact, I believe that a majority of Americans do not want this to pass and are now thrilled.

I am writing my Conressmen and Senators demanding that they stick to their guns and do not pass this handout. Enough is enough. No more free lunches. Fiscal austerity is finally arriving.

I love the way people can be 100% against something when it does not affect them or someone close to them.

We have been under contract since mid March on a HUD home that OUR tax dollars are paying to maintain. So, for everyone that is not in favor of the extension, I hope you enjoy paying monthly maintenance on all the HUD homes that are about to go back on the market!

FYI, our issue is having a crappy lender and having to switch companies after having an original close date of May 14th and dealing with HUD's slow poke selling agent! I have been on top of everything with the lender waiting no more than 24 hours for ANYTHING they have asked for. I probably would not have bought this home if it were not for the $8K incentive as it needs $25K in repairs. For the skeptics, don't worry we can afford the home without the credit.

Been approved for over a month now.. Just waiting on M&T Bank to approve!

The underwriter is waiting on a comparible home sale in the town (which is only 1 square mile). What if all the other underwriters are waiting for comparible sales to sign off.... THEN NO HOMES WILL EVER SELL!!!!!!!

If they write a bad loan they lose their jobs, if they write NO loans then they keep there jobs...

I call B&!! $h*% on the banks, government, politics and so on..

Maybe if we don't vote at all then they will get the hint!!! We DON'T TRUST ANY OF THEM!!!!

As a Realtor I can tell you that thousands of home transaction will fail because the buyers are walking away from the deal now that they can't get the tax credit.
Short Sale transactions that we wait for months to get a response from the bank will now go in to foreclosure because the buyers will not walk away.
The buyers did everything they were supposed to do. They are ready to close but because we can't get a response from the banks the deal will fail.
Just what we need for the housing market -- adding homes for sale to the already overburdened market.

This is so sad... my husband and I have spent soooo much money on other ppls' bills trying to get our land straight for our home to be set on only to find out that we won't be getting our money that we REALLY needed... this is injustice to mine and so many other people's families. I just don't get it. I can't let it kill me though b/c going through this entire experience I've come down with high blood pressure and almost stroked out. They just don't seem to realize that for some people that money is crucial in their household I know it was for mine, I just can't believe this....

My daughter tried to buy her first condo and signed a contract on April 19. Freddie Mac had foreclosed on the unit, but they dont transfer the title until they get a new contract. They do this to legally say they only owned it one day and thus argue the point they only owe 1 day of maintenance fees, when in fact several thousand is owed. The condo association rightfully wants it back dues. But my daughter is stuck in the middle and no one cares about the unit getting sold. Thousands of units being foreclosed on and Freddie Mac doesnt care when they get sold.

Many things come to mind on this:

1. Knowing that the credit was temporary, and knowing the likely effect on prices after its end, why were so many people convinced to leverage an asset with a very high probability of immediately depreciating?
2. Virtually all our policy focuses on the short term immediate benefit for a select group of people, while ignoring the longterm consequence on everyone.
3. Why didn't more buyer's agents add a "close on time for the tax credit" clause?
4. Focused tax policy aimed at changing individual behavior has far greater distortionary cost and unintended consequences than broader policy.
5. Prosperity = abundance. Abundance is marked by low prices.

Please visit the following link and see you voted NO for this bill. We need you to contact your representative and request them to extend the tax credit

http://www.opencongress.org/vote/2010/s/200

What ever happened to the "stimulous money" and all the bull we were told on how that was going to get our economy jump started! This is just another example of our current administration/leaders doing their best to make a mess of our lives. The banking business is a joke, and unless you have perfect credit and alot of patience you wont get a loan so the fat cat CEO and bank executives can fatten their pockets.

We followed all the rules and did everything we were supposed to do for this tax credit. We are a middle income family, that doesn't qualify for many credits, and now once again fall between the cracks in beaurocracy. If I was poor, I would have more opportunities than I do working my butt off to make ends meet. So now we have invested all of our savings and will not be able to replenish them, as planned, because the banks can't close on time.
Wonder if they're getting a kick-back from the gov't for stalling deals. I guess that's a good way to pay back bail out money.

I will also be forced to cancel my contract and forgo the money paid in appraisals (not to mention $8k 1st time home buyer & $5k in "Welcome Home Funds") because I have not been able to close on a contract that was signed in early April. This is not a short sale and there's nothing complicated about this deal. In early June (just before closing) my lender discovered, to my surprise, I had not filed my 1040 tax return. Apparently the H&R Block "tax preparation specialist" I paid filed my return incorrectly and I had to refile with the IRS (using a different accountant since H&R would not call back and there was no time to waste). Needless to say, an extension of the closing deadline would enable me and others in abnormal situations to follow through on the transactions we started months ago. Without the credit my motivation and incentive is lost as this will have a $13k loss compared to the original plan.

I want to say thank you to H&R Block for filing my taxes incorrectly and thus costing me $13,000!!

And to those commenting on here that are against the credit need to see things from the big picture and understand outcome and process a little better (and not their opinionated subjective view). Tax credits and rebates are not something new for business/economical stimulation. Ever see a dying downtown revitalized because of tax abatements? Do you think a city does not offer tax incentives to attract new businesses, industry and organizations to a community? Why does Honda or Toyota build a plant in particular states and communities? Why do companies shut their doors and relocate? Tax incentives are designed to motivate those who have a decision to make to make a decision that supports the desired outcome of the process. In the housing situation: reduce existing inventory, provide opportunity for those in bad situations to unload their property in a difficult market (an $8k tax credit is nothing compared to the loses banks and the fed will see in foreclosures and a housing market losing value), motivate people to purchase a home who would otherwise rent (resulting in stability for communities - home owners have something to lose, renters do not) and many more desired outcomes. We are not talking hand-outs here folks. These home buyers are involved in high ticket transactions that come with a great deal of personal responsibility and liability. Not a simple welfare system to support victims of various situations or those who have fallen into a state of learned helplessness.

My two cents...

Nevada needs this tax credit extension badly. We are the hardest hit state in the nation, and this would provide a few people a little relief.

Diana Renfroe
Dickson Realty

Lot of complaining from many who are looking for big government to hand out some coin....

gang, the well is dry ('cept the oil well, that is), and those of you holding the bag when it dried up are out of luck.

Buckle down and get ready for some serious fiscal austerity. Time to take our medicine. Uncle Sugar is no more.

I received a call after the bill was approved by the senate from my lender letting me know that we were in luck that the credit was extended, our agent also told us that it had been extened. Apparently there are very few people who really understand how bills are passed. I do so I was not happy with them for running through their client list to give misinformation only to get people's hopes up. we are just like most of the people who have placed comments here. Work hard play by the rules and had the misfortune of getting involved with a short sale. The bid was in by Dec 1st, and we heard nothing but lies from the listing agent. He would inform us of things that were done by the bank but were not and even bet his life that we would close in time for the credit. (I wonder if he told other people this, maybe someone took him up on it, we haven't heard from him in a while) I live in new england, there is really nothing in our price range that is not either a foreclosure, short sale or if it is a private seller then the house is a tear down ( and example was the termite infested house that the sills were gone and nothing passed inspection mold, bad electrical, broken floor joist etc). we refuse to get into the same boat as the people who were foreclosed on and buy something out of our range or even at the top of what they would loan us. we have money in the bank but that tax credit would have bought things that we needed and would give us a much needed cushion if anything were to happen. This is my first time buying a house I have decided that I hate every one and every step involved!!

I have read a lot of the postings, what you all need to realize is that the Banks are losing nothing by not closing. The banks are covered in full on the Foreclosed property and that the sell out of that property is all pure profit. So in other transactions like a short sale they are really losing that profit margin. So why would they really want to close.

What i do not understand is I want to buy a property, small SFR, and am looking for a loan for under $50,000. excellent credit and 20% down . The banks do not want to do it because the % of closing costs are too low. ... I looked into Homepath and conventional. How are they going to sell all these homes?

The federal tax rebates may have expired but you may be able to get a home buyer commission rebate from your real estate broker when buying a home. At least the private sector pays for this rebate compared to the taxpayers subsidizing the tax credits.

David Gorman/Broker
Gorman and Hughes Realty

PAY FOR YOUR OWN HOUSE! Stop asking everyone that pays taxes (and there seem to be fewer of us every day) to do it for you. Buy your own health plan, pay for your own appliances, buy your own car, pay your own mortgage, and get out of my wallet. I don't yet have a house and am renting until I can afford one, which is the fiscally responsible course of action. Save your money to increase your buying power and stop waiting for Barry to fix all of your problem.

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About Jamie Smith Hopkins
Jamie Smith Hopkins, a Baltimore Sun reporter since 1999, writes about the regional economy. Her reporting on the housing market has won national and local awards. Hopkins is a Columbia native and has lived in Maryland all her life, save for 10 months spent covering schools in Ames, Iowa.
She trained to become a wonk by spending large chunks of time as a geek and an insufferable know-it-all.
Baltimore Sun articles by Jamie
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