Updated July 1 – Now the bill has passed both the House and the Senate, and is headed for the President’s desk. Provided you were under contract by April 30th, you would NOW have until September 30th to receive the buyer credit rebate. Whether you like the credit or not, it looks like it’ll be extended.
As far as I can tell, the only people this really helps is buyers who have been waiting on short sales to close. Short sales often take a notoriously long time to close, and so a buyer who went under contract on, say, March 3, might still be waiting for closing papers. Perhaps there are some other buyers who for one reason or another weren’t able to meet the June 30th closing deadline, but my guess is that this extension will most help short sale buyers, and hurt the deficit. Oh that’s right – we can just print more money, it’s fine then.
At least, not yet. Maybe. We’ll see.
In another case of “will they/won’t they”, we’re watching Capitol Hill to see whether or not the homebuyer credit – you remember that, don’t you? – will have the June 30th deadline extended. Under the original bill, a buyer had to be under contract by 11:59pm April 30 2010, and close by 11:59pm June 30 2010, in order to receive up to $8000 back in the form of a first-time buyer credit (or $6500 for an existing homeowner).
Because of the supposed impact it had on the real estate market, and because lenders are so jammed up trying to get these loans through before June 30th, an amendment to the American Jobs and Closing Tax Loopholes Act of 2010 was introduced that would extend the deadline to close these loans to September 30 2010.
Note – The amendment has not been passed into law. Both the Senate and the House have passed it, but because they amended the amendment – don’t you love government? – they have to work on amending the amendments … or something like that. Nevertheless, if you weren’t under contract by April 30th none of this applies. But don’t fear – there are still good deals out there.
Honestly, I was kind of hoping we were done with this tax credit thing.
Again, interesting to hear the individual experiences that are out there. I still think that many of these cases are occasional incidences caught up in the white wash, but perhaps I'm wrong. Nevertheless, we've got three months to clear it up.
I have one client who this is extension is helping. Closing was scheduled for 6/22, then 6/28, then a bombshell hit, ooops, 3 year old addition crossed the property line! Seller has to acquire 20 square feet of land to settle property line grievance. Buyer, lender, insurer, and closing agent were all on schedule. Seller messed up. Now my client gets a reprieve for doing their part right. They followed the rules and got caught up in an ANOMALY. I think this extension is only going to benefit a handful of people.
The fundamental problem I have with this is the same problem I have with most government programs of this nature. It's simply shuffling tax money from person A to person B. If you really are looking to help the economy and put more money in the hands of the consumers then how about a sweeping tax cut. The same government that extends these one time credits is discussing getting rid of mortgage interest deductions, how does that make sense?
Also it's pretty well documented that about $9 million of the last home buyer credit went to inmates: http://money.cnn.com/2010/06/23/real_estate/mon…
When the government intervenes and creates a fictitious market all it does is increase the damage that is done when things inevitably balance. The government cannot CREATE jobs, prosperity, etc. the only thing the government can do is tax privately generated income and shuffle it around, this is just another example of that. I'd like to see it end as soon as possible, I wish it had never started.
Okay, I can see that, Sean. My issue with it continues to be the imbalance between cost-benefit, but to yours – and Kim's – point, perhaps I should have said that the majority of people I can see this helping would be buyers of short sales. There will be others, of course … for instance, buyers of new construction.
Should that law be retitled “The Law of Short-Sightedness”?
The extension also helps people who are having their house built. Have a friend who signed the contract 4/28 but won't be closing until August when his house is hopefully finished being built.
The estimates I got were that 180,000 loans were stuck in process. Now I assume some of them are not worthy of closing, but by pulling forward all these transactions, the industry got overwhelmed. Another proof the Law of Unintended Consequences is in full effect.
As I said, Kim, I'm sure that there are some buyers out there who got caught up in that mess. The fact remains though, that if a buyer hit the original date of being under contract by April 30th and they were advised to use a premium lender, then those loans should have been closed two months later. Sure, delays happen, but two months was enough time to get things through.
My cynicism comes from the fact that we're spending on the order of – conservatively – $50000 per credit. The cost outweighs the benefits, and extending it another three months doesn't make strong financial sense. Look, it's my industry too – sure, I want stability in the marketplace, but a three-month extension that's costing untold amounts of money in an already shaky economic environment doesn't make sense to me
I hope I AM wrong, but it seems a lot like sticking bubble gum into a hole in the dam.
As I said, Kim, I'm sure that there are some buyers out there who got caught up in that mess. The fact remains though, that if a buyer hit the original date of being under contract by April 30th and they were advised to use a premium lender, then those loans should have been closed two months later. Sure, delays happen, but two months was enough time to get things through.
My cynicism comes from the fact that we're spending on the order of – conservatively – $50000 per credit. The cost outweighs the benefits, and extending it another three months doesn't make strong financial sense. Look, it's my industry too – sure, I want stability in the marketplace, but a three-month extension that's costing untold amounts of money in an already shaky economic environment doesn't make sense to me
I hope I AM wrong, but it seems a lot like sticking bubble gum into a hole in the dam.
As I said, Kim, I'm sure that there are some buyers out there who got caught up in that mess. The fact remains though, that if a buyer hit the original date of being under contract by April 30th and they were advised to use a premium lender, then those loans should have been closed two months later. Sure, delays happen, but two months was enough time to get things through.
My cynicism comes from the fact that we're spending on the order of – conservatively – $50000 per credit. The cost outweighs the benefits, and extending it another three months doesn't make strong financial sense. Look, it's my industry too – sure, I want stability in the marketplace, but a three-month extension that's costing untold amounts of money in an already shaky economic environment doesn't make sense to me
I hope I AM wrong, but it seems a lot like sticking bubble gum into a hole in the dam.
As I said, Kim, I'm sure that there are some buyers out there who got caught up in that mess. The fact remains though, that if a buyer hit the original date of being under contract by April 30th and they were advised to use a premium lender, then those loans should have been closed two months later. Sure, delays happen, but two months was enough time to get things through.
My cynicism comes from the fact that we're spending on the order of – conservatively – $50000 per credit. The cost outweighs the benefits, and extending it another three months doesn't make strong financial sense. Look, it's my industry too – sure, I want stability in the marketplace, but a three-month extension that's costing untold amounts of money in an already shaky economic environment doesn't make sense to me
I hope I AM wrong, but it seems a lot like sticking bubble gum into a hole in the dam.
As I said, Kim, I'm sure that there are some buyers out there who got caught up in that mess. The fact remains though, that if a buyer hit the original date of being under contract by April 30th and they were advised to use a premium lender, then those loans should have been closed two months later. Sure, delays happen, but two months was enough time to get things through.
My cynicism comes from the fact that we're spending on the order of – conservatively – $50000 per credit. The cost outweighs the benefits, and extending it another three months doesn't make strong financial sense. Look, it's my industry too – sure, I want stability in the marketplace, but a three-month extension that's costing untold amounts of money in an already shaky economic environment doesn't make sense to me
I hope I AM wrong, but it seems a lot like sticking bubble gum into a hole in the dam.
You're just wrong. I hope the extension goes through. It's not just short-sales. So many regular loans are going through the underwriting process and closing process that they can't physically get closed by the June 30 deadline. Not extending it, hurts that first time home buyer who could really use that money making the transition from renting to home ownership. Of all the stimulus ideas, this is the one that made the most sense.