It seemed a reasonable solution to an unexpected problem. The most recent homebuyer tax credit required buyers to go to contract no later than April 30th, 2010. Buyers also had to close on their new purchases no later than June 30th 2010. It all seemed simple enough.
The substantial tax credits, which could be taken in cash and which many purchasers expected to use to offset closing costs, could be collected in several ways. However, many purchasers were rightfully cautious about the government’s reliability and included contingency clauses in their purchase and sale agreements regarding the satisfactory completion of the tax credit.
Due to legislative reforms that have caused lenders and appraisers to be more accountable, closing dates can no longer be expected to meet a 60-day closing date. Today’s closings take between 75 and 90 days if all goes well. When there are complications such as improvements required by lenders, closing dates can be even further delayed.
The National Association of Realtors (NAR), the nation’s largest trade organization, threw its considerable weight behind a legislative action to extend the June 30th closing deadline to September 30th for homebuyers to retain the original tax credit.
The motion seemed like a reasonable solution to an unexpected problem. The closing date amendment was added to a tax extender bill presented by Democrats. In Washington today, the political infighting is characterized by the Senate’s inability to pass the extender bill.
As incredible as it seems, the Senate proposal has been denied. As a result almost 200,000 sales may not take place. Most of the purchase contracts included contingencies that if the tax credit was not included in the transaction, the sale was nullified.
Congress’s inability to extend the June 30th deadline may very well result in 180,000 homes being returned to the already over-flooded marketplace. Once again, Congress has failed the American public and the American taxpayer. The homebuyer tax credit was a well-intended incentive program designed to stimulate the real estate market. Now, it has backfired and will doubtless cause further stress to the housing market. Once again, Congress has failed the taxpayers who elected them.