House Finally Moves To Extend Closing Date
The Homebuyer Tax Credit Bill that provided qualified first time homebuyers an $8,000 credit and other qualified homebuyers as much as a $6500 tax credit carried two major criteria. The first was that the homebuyer had to go to contract on or before April 30th 2010. The second clause required the homebuyer to close the transaction on or before June 30th 2010.
As the closing date deadline drew near, real estate agents and lenders notified the purchasers that many of the closings would not be completed within the required timeframe. Unforeseen delays, especially when third parties were involved, were causing closings to be delayed by as much as 30-60 days.
Senator Harry Reid, the Senate majority leader, attempted to gain an extension until September 30th for homebuyers who expected the credit and who were compliant with the April 30th purchase date. Reid tied the extension request to a bill extending unemployment insurance to workers whose benefits were due to expire. Unexpectedly the larger bill did not pass so the homebuyer’s request was also denied.
On Tuesday, June 29th, the House of Representatives passed by an overwhelming majority 409-5, a version of the Reid amendment. Reid, a Senator from housing-troubled Nevada, must now find a way to bring the measure to a vote on Wednesday so that President Obama can finalize the extension until September 30th.
While it appears that the bill will move forward and that the nearly 200,000 homes that could not meet the closing deadline will receive the extension. Reluctant homebuyers may technically have a way out of their contracts. Most homebuyers put a contingency in the contracts reserving them the right to cancel contract if the closing date was not met. Technically 180,000 contracts will be in non-compliance.
As long as the extension occurs, the majority of homes will most likely proceed as expected. However, the frustration of Congress delaying the extension amendment illustrates the danger of relying upon government to deliver on their promises. When dealing with Washington today, the best plan is to expect the unexpected. There is so much political infighting that positive results are difficult to attain.