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June 27, 2010

Poll: Home buyer tax credit extension -- yes or no?

Most of your chatter here in the last few days has been about the as-of-yet failed attempt by the Senate to extend the closing deadline for the home buyer tax credit. Those caught up in loan, title, short-sale or other tangles really want more time. Those upset about the money doled out already want the credit to end June 30, a date that was itself an extension.

Sounds like a poll, don't you think?

Here's a sample of the pro- and anti-extension commentary:

Wonk reader Debbie writes, "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."

Metzger, responding to the many people still waiting to close on short sales, wrote: "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."

Last week's poll asked renters to share how the state of the housing market has affected their efforts to buy. The most popular answer -- with just over a third of the vote -- was, "I haven't bought yet because prices are still too high for me."

"I haven't bought yet because I'm worried about where the market is headed" and "Market conditions have mostly been on my side -- not a bad time to be looking" were tied for second.

One of the write-in answers encapsulates the boom-and-bust's consequences: "I lost so much money on my last house that I need to recuperate."


M&T Bank has pushed our closing back 4 times now and we are now going to miss the Tax Credit Deadline! $8,000 in the hole...
And on 6/25 when the last missed closing date passed, we received the notice Of the Essence Letter from the seller saying we have 10 days to close or we are going to be responsible for our deposit ($5,000), costs already taken on ($6,500) for architect, survey, appraisal, consultant, lawyer, etc. and potential other money the seller is planning on suing us for!!!!

If we lose the house we are out minumum $20,000 for TRYING to buy a home! How is this right?!?!

The underwriter is waiting on a comparible home sale in our town (which is only 1 square mile) in this terrible market where no homes are selling. And what if other close to closing homes are also waiting for comparible sales.... Then NO SALES will ever happen.

These underwriters are keeping their jobs safe cause if they give out NO LOANS then they won't lose their job!!!


Those of you who are not going to be able to close in time to get the tax credit and whinning that is is $8500 down the drain, please remmeber that it never was your money to begin with.

It's needs to end, no matter when they cut it off there will always be somebody crying about how they just missed the deadline or trying to pin it on the bank.

The bottom line is you had nearly 2 years to get this done and you waited too close to deadline to finally get your act together. So now you pay the price.

I do not feel the least bit sorry for you.

Waited too close to closing? Acts together? Some people on this comment thread are making some terribly uninformed generalizations. My fiance and I did some fantastic planning, put my co-op up for rent, took advice from attorneys, realtors and mortgage brokers. All of them told us that our financial situation, timing and agressive push to find a home before we got married were all almost perfectly timed. We got a super low rate, locked in on a gorgeous house that appraised for more than we paid for it. We raced paperwork to the bank 24/7 for weeks and did everything right. The tax credit was funded from the get go and the bank told us we'd get closed by the deadline without a doubt. Here were are, and we're still waiting for a closing date, and it looks like we'll miss the 30th. The banks took on WAY too many loans to process in a normal amount of time. Our sale was totally legit, existing home, qualified for it all, yadda yadda. The banking industry, who helped get us into this mess, saw $'s signs only AGAIN and took on too much work. Now we'll lose out on $8,000 that were were in time for and perfectly qualified. That's why the pre-funded tax credit should get extended or made retroactive for people like my fiance and I. Upon getting that credit, we would have immediately put it back into the local economy, which is what the legislation was originally designed to do. Unfortunatley, the tax credit didn't get the results hoped for at first, and was extended more than once. Now, as the recession has slowed, and more people came into the market as strong buyers, the credit is going to disappear, as close to 200,000 people would have been ready to spend $8,000 each in their local areas. A waste if you ask me. We busted our humps getting this mortgage going and hustling on renting our co-op and filing paperwork. Plain and simple - not fair, taken advantage of by the banking system who couldn't handle the workload.

Sam are you kidding me? The $8,000 credit was never our money to begin with?? I pay over 30% of my income towards taxes. I'm sure a smart guy like you knows about the spending and the debt our federal government has
going right now. The waste of tax funds is biblical in size. The money given as credits, the money the IRS collects and spends as part of the federal budget IS OUR MONEY.

I agree with Sam. Just because you wont get 8k doesnt mean that you lost 20k. It just means you will buy a house in the same manner as 99.9% of americans, at your own expense. Why should my kids and grandkids and thier kids be paying for this wreckless and wasteful spending by our gov't? Everyone should have just offered 8k less on the home purchase.

Tim, most contracts allow you to recoup your deposit for failure to get financing. Of course it depends on what is in your contract. You may want to take a look and see what stipulations there are. Your agent should know since he/she is who created the contract from their brokerage. I, too, would be extremely upset losing a $5,000 deposit, especially when a $1,000 to $2,000 deposit is the norm. I can't imagine the seller wanting to take your deposit and put the home back on the market. Ask your agent about getting an Addendum to extend the contract.

Frustrated, your story is somewhat confusing. If you spoke with Realtors, attorneys, and mortgage brokers, then why did you go through M&T Bank direct? Did you know that bank employees do not need to be licensed to do mortgages? They are only required to be registered. I am sorry you have had a rough experience with M&T Bank. Most banks are all the same. I am sure you are not the only one who had such a horrible experience, which is evidenced by the many people who have dealt with other banks through short sales. I am sure we can all agree the system is not perfect. Not everyone is going to be happy with the service and outcome they receive.

The bottom line is that the banks were not prepared for the unanticipated volume they would receive. The banks should be held accountable, but unfortunately they won't do anything. Even if you decide to drop out of the contract because you won't close in time, they will not do anything to accommodate you. I am sure it would not have made much of a difference going through a broker either. It is time to decide what you are going to do next and you are all running out of time.

1. Do you close after the 30th and forget about the credit? If so, get an Addendum immediately so you can extend your own contract.

2. Do you back out of the contract all together if the credit was the main reason for buying in the first place? If so, speak with your agent immediately and ask them what stipulations are in the contract so you can get your deposit back.

3. Do you re-negotiate the purchase price to a lower amount ($8,000) to compensate for the loss?

4. Ask that the seller contribute $8,000 towards closing costs to keep the contract intact?

These are things that can be done without much of a problem. Your Realtor should be able to help you with this. Neither the seller's agent, or your agent, will want the deal to fall through. Just don't wait for the last minute to take these necessary precautions to get your deal done even if you may miss out on the credit.

I don't think that some people understand what is really going on. I was in contract January 16, 2010. You would think that 6.5 months would be plenty of time to close a house, huh? Nope. For me, it wasn't my lender, it was the banks who are selling the house...they took forever! And the selling realtor is not very good at pushing this through either. It has nothing to do with ME getting my act together! I am just the one losing out, go figure, the average citizen...losing out, that's not new!
I feel that it would be fair to extend the tax credit date to all of those who were in contract by the deadline April 30, 2010, but haven't closed yet. I don't know why they haven't thought of this. Then there will be no "new" people, just the people who did all they could and are now caught in the stupid bank system, no fault of their own.
Does Metzger have lots of money? Saying, "If you wanted a guarantee of receiving the credit, you should have gone after an REO or a regular resale (non-distress)" is great if you have cash or lots of money! We tried to buy an REO, beaten by a cash offer $30,000 less then our offer. Tried to by a regular sale, beaten by a friend of the realtor who offered $10,000 over what we did! I know of someone who wrote 12 offers before they finally got a place, and they were reasonable offers.
People who aren't out there trying to buy a house don't really know what's going on!

Gina- there is no real proof of when a house goes under contract and the govt isnt back checking. There was an article recently about it. The only thing that proves anything is the settlement statement, thus the need for a hard deadline. If you still feel entitled to 8k, perhaps you can go door to door and take a collection from your friends/neighbors and realtives....Sound harsh, whats the difference?

Thanks for your advise. We are just too far in now to change direction and for whatever reason the seller has us by the ba!!$. We are using a mortgage company and they have been pushing the paper between the bank and us as a mortgage company is supposed to do ( and all they do in reality).

To all the others who want to hate the fact that people were getting free money and they weren't..
The only reason the housing market was up for parts of the last 12 months is because of this incentive. I agree this market MUST reach rock bottom in order for it to ever stabalize, but we were just part of the many who were taking advantage of what was out there.

If you buy a car and there is a $5,000 incentive. Imagine the incentive requires you must drive to LA from NY in 2 hours to take advantage of this incentive. That is what its like giving your contract to a bank right now and asking them to close in 2 -6 months. JUST NOT GOING TO HAPPEN.. ITS AN IMPOSSIBILITY.

I even consider myself more Republican, even though the party systems are a joke anyway, but would still liked to have taken advantage of money that was available. Imagine, Republicans not willing to take advantage of FREE money! HA.

The tax credit should have never been given to begin with. We've been trying to move since February and not only we were outbid by buyers with more money but now they will be getting the tax credit and our family will be paying for it. Cry me a river... At least you have a new home to look forward to, but we're stuck in an apartment, compliments of the artificial credit-fueled market prop.

If the $8k means so much to sellers, they should've included some type of deadline in the contract. Then they could cancel the contract when they know they won't get the credit and negotiate a new contract with a lower price.

I think the extension is a good thing. It would personally help me and many others. I do not need the $8000 to be able to afford my new home but it would be helpful in purchasing needed things and to do some updating in the home, all of which would stimulate other businesses. I have had a signed contract since the end of January and as of today am still waiting on the seller’s bank to ok the short sale. Everything has been in place and ready to close for 2 months now and my closing has been postponed 3 times. I did not wait until the last minute to put in an offer on a home so I dont feel I should be penalized in missing the tax credit because the banks cant get their act together.

Trust me I can see both sides of the coin. I can understand people being frustrated at having to pay for this, our government is spending out of control. But by the other side of the coin, that I am seeing first hand the market is in a bad situation right now. I have had an offer in on a short sale here in Las Vegas since early October of 09. The bank actually approved the offer back in may 25 of this year. Then I started running into roadblocks with the lender and after jumping through more flaming hoops then I can count, I am just on the verge of closing. But with the extra time the lender has dragged the process I am probably going to miss out on the tax credit. I feel ripped off and angry at both my lender and the sellers bank. That money was going to go into renovating the house. Back into our construction industry which is hurting severely right now. Everyone I have spoken to that was going to get the tax credit usually talked about doing some kind of repairs on their house. Traditionally the construction industry helps our nation out of slumps I don't understand why more has not been done to help them out. Instead we gave massive amounts of money to banks that are now holding it hostage. I think a larger trend is being ignored here. The fact that the banks are not giving loans to anyone. If the market keeps heading in this direction then no one will be able to qualify for a house. And the economy will just keep getting worse. I think extending the credit might help a little and I would love to get the money. That said the banks need to be more lenient. They got us into this recession writing terrible loans now they pull a 180 and won't give anyone a loan.

For people in situations like me, this really needs to be extended. I started looking for a home right after the tax credit was introduced and I would not have even looked if it wasn’t for this credit…which was the purpose of the government introducing this incentive. Over a year ago I found a home I wanted to purchase and it happened to be a short sale. To make a long story short, the bank messed up multiple times and has dragged this on, only to come through at the last moment. I will be devastated if I cannot get this credit…especially knowing that I will only miss it by a couple of days if I can’t close by the 30th. I did everything right and the bank is to blame, but because it’s a short sale I cannot go back and ask for money off the price.

WOW! So cause I am one of the 200k people who are stuck in the middle because the banks, lien holders, etc drag their feet - I am in the wrong? The govt gave a deadline of April 30th to have a contract signed which we meet BUT they failed to give ENOUGH time to actually get into the house... 60 days to close from the beginning of the process is not enough time... AND yes 8k is the reason enough that people dove into the buying market... same reason some of us buy a tv ONLY when it goes on sale... Imagine getting home a realizing that your credit card was charged the full amount... wouldnt you put up a stink and maybe call the store?

I think it's hilarious how so many people think they are entitled to that money.

Maybe you could try working harder and saving money to buy a house like every other person previous to Obama becoming president did in order to afford their own house.

So sorry you won't be able to take this short cut. Hopefully I'll find a way to sleep tonight

Vote to extend the tax credit on BOTH of these polls! And PLEASE forward to others!

good post Matt! same situation my house was fnished by april 30th and we still may not close until after the date. and of course the tax credit is very attractive thats why we built, and to the person complaiing about paying 30 percent in taxes I pay 38% its not or fault your bitter!

The credit was an incentive to buy and to buy quickly to assist the slump. So, there are many people who were aggressive in forcing themselves into a position to buy quickly, to gain the incentive, and also assist in the slump. So, all of those who happened to fall into identifying a home, and entering a contract before April 30th, and running like mad to make that June 30th deadline, are now left sadly disappointed and confused. The banks are still evaluating our transactions, some of which are redundant (ie. questioning the appraisal and then accepting the appraisal, having us re-sign forms and other forms that certainly could have been signed early on), with two days left on the clock. It does appear that this is a pattern with others. Hopefully, the bill that failed for the extention will be re-developed for those who eagerly accepted the challenge of the June 30th deadline.

We put a contract on a short sale Feb 27th - which is proof we were under a contract by April 20th (well before). The bank has been in the "final stage" for 3 weeks - they've got the agreement from the 2nd mortgage and seller and just need to give their final nod of approval.
I think that if you can show evidence that you were under contract by 4/30 you absolutely should get the tax credit. We all did what we were supposed to do ans were just at the mercy of those who, frankly, could care less.

I was going to use the USDA 100% loan ever since Jan 2010 and had to sell a car and pay off some bills to raise my credit for home-buying purposes. I went through 3 different lenders who didn't know the USDA loan details and gave me wrong info...found a good lender, but by then it was mid-April and now that lender cut off writing any USDA loans 'cause they were going to run out of funding. I had to find yet another lender, but by that time, the house I'd wanted got unlisted and now it was nearing April 30 deadline. So I'm waiting now for 1. USDA to reload funding 2. still crossing my fingers for that tax credit. The tax credit is the reason I got up and checked to see if I qualified...I've been qualified since Feb 2010. I really hope they do extend it completely to the end of the year...and do it sooner than later or we'll have the same time-constraints again. To the end ot year and then DONE. That's enough time for everyone (assuming USDA's refunding in Oct.).

Oh, and it IS our money!!! I'm a single mother who NEVER got any help from the gov and I pay around 9K in taxes per year.


Sad story indeed. Especially the part where you include not receiving gov't assistance and pay 9k in taxes per year. What is even more sad is that every American is indebted over $300k in taxes to the Federal Government. Out of control spending, raising the deficit (has more than doubled since Obama took office in two years), unfunded mandates, etc. will BK this country. None of this will even matter. Our debt crisis is being ignored right now because Europe is a few steps ahead of us. We can surely bail them out, but who is going to bail us out? Your dollars will be worth peanuts unless something is done. And yet Congress wants to pass another $100 billion stimulus package. It all has to come to an end at some point. The party is over people. Time to pay your own way and be prepared to be taxed to death in the future in order to pay for all this. There is no free lunch.

IMPORTANT UPDATE: Today the House of Reps. appear to be voting on a stand-alone bill proposing first-time buyer extension (close date). If passes, then on to Senate.

Read full article below carefully and note also that unemployment benefits are also being voted on but also stand-alone.

Further link to the Daily Leader in the House shows the that Homebuyers Assistance and Improvement Act of 2010 is on the docket.

We're in the same boat as everyone else and, now that there is no doubt we will miss the June 30 deadline, we are sinking fast. All we heard early on was "don't worry," "not a problem." All we want now, after fulfilling our part of the transaction in good faith, is for the government to fulfill theirs in good faith as well.

Wow, reading he comments of this post really surprises me. The banks are still having issues? I thought they would have fixed these buying issues by now. This makes me really glad I went with new construction. The builder had all its ducks in a row and things went smoothly. Their financing was sufficiently competitive.

Rather than extending the tax credit, I think banks should be forced to give the credit out of their own pockets for sales they've contributed to delay past the deadline. We can't keep handing out money and need to use it to help reduce the budget deficit. Banks stand to make a ton of money off the interest they charge on loans. Unfortunately, I doubt this would work since banks would be motivated to kill stalled sales.

Yeah, good example with the TV. There is one important detail missing. The advertised sale expired on Sunday and you still want to get the sale price on Monday. And no, it's not like your credit card was charged more (that would be a fraud).

So what would you do at the cash register? Would you still buy a TV (assuming you do need one and even the regular price is affordable) or just walk away with no TV? I agree with previous comment that if tax credit was of crucial importance, it should have been written into a contract.

And all the folks with short sales - are you kidding me? You didn't know that it could drag for years? Read this same blog, for cripes sake, there was a short sale story just a few months ago.

What's with all this entitlement and drama? It's not like you're losing a limb or something. The terms were clearly stated in advance, you missed the deadline, end of story. If you didn't really need a house, you shouldn't have bought it. And that's exactly why this credit was wrong to begin with.

It may not be my money, but the tax credit was the impetus to purchase a property before April 30th, which is what the incentive was designed for. And to the readers who say quit whining, why don't you give back every single $ you've gotten from the government from tax credits and such over the years? I'm just playing by the rules, but the plan was flawed from the beginning due to the state of banking and lending in this market. It is fear perpetuating fear, where underwriters won't take a chance of approving anything outside of black and white policy and risk losing their jobs. They'd rather not lend than make a loan w/a .00001% chance of default. And I would know, since I'm an industry veteran.

signed contract for a REO on April 30th for all cash offer, cleared all contingencies 3 days later, the seller still is unable to close escrow. Customer service in this country has gone to hell, maybe these banks & title companies need to hire some staff to get this done.

Have the results of this poll been sent to lawmakers?

Mark, I don't send the results of these polls to anyone -- that's not what they're for. Readers can feel free to do so, however.

Either way, I'm pretty sure that Congress is aware a number of home buyers want an extension on the credit.

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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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