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June 17, 2010

Possible home buyer tax credit extension

Congress is thinking about extending the home buyer tax credit -- not the deadline to sign a contract, but the June 30 deadline to close on the deal.

If you're worried you're not going to get to the settlement table in time, the thought of three extra months will probably come as a joyous relief. (If you're a non-buyer irked at all the taxpayer money Uncle Sam is handing out, on the other hand, you were probably hoping many deals wouldn't close. I do recall a few reader comments to that effect.)

The Senate voted Wednesday to move the closing deadline for the $8,000 and $6,500 credits to Sept. 30, so the proposal is already moving through the system.

Walter Molony, a spokesman for the National Association of Realtors, said his trade group estimates that about 180,000 buyers are likely to miss the June 30 deadline "because of delays in the process." That's particularly true of short sales, he noted.

Are you still trying to close on a tax credit deal? Do you think you'll manage it by the current June 30 deadline?


They need to stop the credit and let the market do what it is supposed to do naturally. The sooner the government stops propping housing up, the sooner people will be able to get on with their it buyers, sellers, or bailers!

Oh, I hope this passes. I'm in the midst of a short sale right co-owner had an ill-timed job transfer. The extension of the settlement deadline will definitely keep the buyers we found from getting too squirrelly. I'm not really sure what our options would be (apart from walking away) if we had to restart the process at this point.

I am near certain they will extend it...the housing market is showing signs of withdrawl and needs another hit of crack -and the pushers (aka Congress) are typically more than willing to supply the drugs

FYI to Mike who I take to be a short sale seller:

Regardless of what your agent or bank told you, a short sale nukes your credit just as hard as a foreclosure, which would have been your other option. From your perspective they are the same.

For those that don't understand where the funding for this tax credit comes from... this isn't funded from your pocket. The money is actually being pulled from corporations. To offset this bill, they are not allowing companies to take a tax break on losses received from lawsuits or legal settlements. So before you think this comes out of your tax dollars, realize it is actually taking money back from corporations and giving it to the people. For once.. logical legislation.

I had a closing date set for yesterday, and found out on Friday of last week that it would be postponed indefinitely because the title has not yet gone through the city paperwork process because of everything being extremely backed up with all the late contracts in April.

So through no fault of my own, I stood to miss out on the tax credit though I met the first part of the conditions (contract down by April 30th) and should have met the second part (closing date was set for June 16th, all paperwork was good on our end).

This is a good thing for folks like me that have played by the rules on this whole thing and will possibly be screwed by forces entirely out of our control...

Sean, sounds to me more like the title company screwed this up. The city has nothing to do with your title work. The title company is responsible for your title work. You may want to get some real answers as to why the title work was not completed on time. It should take no longer than a week to get the title work done.

we just got our approvial on a short sale that we placed our bid on back in January, we will not close by the 30th of June. I really hope they pass this extension. We have been waiting so long for the bank or who ever does short sales that we could miss out on this. The only reason we started looking over a year ago was because of this tax credit, and we could miss out on it because of the deadline to close. It sucks

I have a short sale buyer. Got under contract in early April, and still waiting, and of course he was worried about losing the credit.

It should be stressed that this is only for people who met the April 30th "under contract" deadline. No new people can get into the deal here... Only for those who beat the first date and may not beat the second.

And I can say from experience that EVERY person I had get this credit are using it for upgrades/furniture/repairs/etc. So that $8k is going right back into the economy, which I think makes it a good credit. It needed to end, but it was a million times better than Cash for Clunkers.

Unfortunately, it looks like the extension was voted down the other day. It was included as an amendment to a bill that extends unemployment benefits and to save doctors from a 21% pay cut in Medicare reimbursement. The amendment was approved, but the bill in a test vote was shot down.

FYI to Josh who I take to be someone who walked away vs. doing a short sale:

Regardless of what you choose to believe, the process is pretty complicated depending on circumstance, bank, credit reporting approach and the like. Also how long the process takes, how many payments were missed (IF ANY) etc. So prior to spouting off some half-cocked broad brushed advice with little in the way of input from the person that didn't ask for your advice, do this: if your a professional then act like one. If your not, then stop trying to act like one.

Wow Jeff. Someone is a little angry today? What is wrong with Josh's advice? Sounds reasonable to me considering that there really is no difference between a short sale with missed payments and a foreclosure. Did you know that the credit agencies reflect foreclosure after 120+ days late? As far as the banks are concerned, IT IS THE SAME THING. How often do you see a short sale approved for someone who has no late payments? It is VERY rare to find such a situation, although I am sure it happens once in a blue moon. I believe it is possible to buy a home 12 months after a short sale with no missed payments. If you have missed payments, you will be waiting at least 3 years.... same as a foreclosure.

If Metzger's statement is true why should anyone bother with the process of completing a short sale? Isn't it easier to just walk away and foreclose? I have no problem with the idea of a strategic foreclosure. The banks profited from creating this mess so they should suffer just like homeowners.

There's been a lot of debate about how short sales affect credit scores compared with foreclosures. Individual experiences vary, that sort of thing.

But FICO says it's six of one, half dozen of another: "as far as your FICO score [is] concerned, there is no difference between foreclosures and short sales or deeds-in-lieu of foreclosures. Each of these actions is considered an account that was 'not paid as agreed', and will have the same impact to your FICO score."

Here's the link:

What is the status now thet the Senate has approved it When will the House vote on it?

Ron, it turns out it's not that simple. What the Senate approved was an amendment to a bill, and the bill is caught up in debate. More details here:

I hope it passes! I've heard that it failed the test vote by a few votes :(
I have had my offer in on a short sale since February 13... still waiting...

Wallace, while I'm not necessarily disagreeing with you, I'm glad to see this closing extension. My wife and I signed to have a new house built last October and without this extension, we would not be able to settle on our house before the deadline due to delays. In cases like mine, where the intent wasn't a rushed purchase right before the deadline, I would consider this to be fair.

I put in a contract and earnest money in December and am still waiting to settle on a short sale house. I think that the seller's agent should been more aggressive in dealing with the bank, but she hasn't been. I am hoping to settle next week, but doubt that it will happen because we haven't gotten the final approval from the bank yet.

In fact, they approved one price, and we raised it a little to roll the closing costs into the mortgage, and they rejected that, but came back with a lower counter-offer.

I've given notice on my place as of July 1, so when you see me living out of the back of my volvo, or in the pod in front of my house, stop by and say hey!

I hope we get an extension......I have been in the process of buying a house since December of 2009. Contract was signed in January 2010. I had to change banks because the closing dates were postponed to three different dates until finally it didn't happen. This new bank I am working with is backed up with closings wanting to happen.......I was just informed that we will probably not be closing by the 30th of June......This has been a very stressful process....I hope I see the light at the end of the tunnel.

we have been in short sale limbo since december of 2009. the bank is just starting to move on a decision about an approval this week. we will never be able to close in time. It breaks my heart that someone like me and my fiance follow all the rules, work our tails off and do everything right, and we may not be able to get this tax credit when people who are in jail and are nothing but a burden on society get all the perks. I think that it is more than fair to extend the credit for legitimate people who have waited, caught up in red tape with banks. Impose serious fines for those that attempt to cheat the system with falsified documents.

I'm very grateful for this proposed extension. We are scheduled to close on our new construction July 18th. I would hate to miss out on the tax credit by less than 3 weeks. Many things are out of our control when you build a house. We have incurred a few short delays in the process no fault of ours.

We are missing the June 30th deadline. We signed contracts back in November and were set to settle mid-May. It's new construction and due to delays in building caused by the repeat blizzards this past winter, everything was backed up for our builder (all of his homes). I surely hope the house passes this extension. I understand them not moving the April 30th deadline for contracts, but closing dates are hard to meet due to a variety of circumstances.

You are all just a naive as I was. I filed in January and owned my previous house for 17 years. Just looked up the status and now they say "maybe" 10 August. Don't expect anything fast because they owe you, not the other way around

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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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