An additional tax credit extension to keep the moribund U.S. housing market from getting even worse was being considered by Congress. The deadline for real estate closings to qualify for a federal home buyer tax credit worth up to $ 8,000 Wednesday night. The House voted Tuesday to extend the tax credit closing deadline to Sept. 30 for buyers who met the April 30 deadline to have a signed contract. But in the Senate the measure is part of a larger bill that also would extend unemployment insurance – which is apparently a much harder sell. If the tax credit extension is not approved, thousands of potential home buyers could be left in the lurch.
Source for this article: Tax credit extension depends on fate of unemployment extension by Personal Money Store
Tax credit extension affects 180,000 deals
The real estate industry has high stakes as the Congress messes with the tax credit extension. Those who wanted to be eligible had to have contracts placed by April 30. At first, the closing date was June 30. But as outlined by MarketWatch, the National Association of Realtors estimated about 180,000 buyers could kiss $ 8,000 goodbye if the original tax credit closing deadline is upheld. One big problem for all of the buyers has been getting the mortgage approval on time as mortgage lenders work through a pipeline clogged with thousands of applications.
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When the contract signing deadline got here, the last-minute home-buying rush overwhelmed the companies responsible for handling the sales, including mortgage lenders, appraisers, title insurers and real-estate brokers. It was reported by The Wall Street Journal that the bottleneck has especially affected short sales, where a lender allows a home to sell for less than the amount owed. Unlike normal sales, where only two parties negotiate the price, short sales, resulting from foreclosures, are much more time-consuming because they require all note-holders to agree on price. Even normal sales are at risk as outlined by realtors.
Critical is what they’re calling the unemployment extension
Nearly 3 million taxpayers successfully claimed the home buyer tax credit through May 22 — totaling more than $ 21 billion — according to the Treasury Department. The Associated Press reports that Senate Democrats have combined the tax credit extension with an unemployment extension for laid-off workers whose benefits are being phased out to the tune of more than 200,000 a week. Democrats have tried for numerous weeks to pass the unemployment extension as part of a larger tax and spending package, but the bill died in the Senate last week. Republicans opposing the measure want to pay for the unemployment extension with unspent money from last year’s massive economic recovery package.
US housing market won't be helped by extension
The tax credit extension may help homebuyers who are waiting to close some of their deals, but it could have little to no effect on a U.S. housing market that appears to be withering on the vine. The home buyer tax credit was the catalyst that boosted existing home sales in April by 23 percent from just one year before. New-home sales saw a 47.8 percent increase. But when the homebuyer tax credit expired at the end of April, home sales in May fell to the lowest levels that they are at since the Commerce Department began tracking home sales statistics in 1963.
A lot more details available at these sites:
Marketwatch.com
marketwatch.com/story/new-deadline-for-home-buyer-credit-nears-approval-2010-06-30?reflink=MW_news_stmp
Wall Street Journal
online.wsj.com/article/SB10001424052748703627704575298610215024500.html?mod=WSJ_latestheadlines
Associated Press
google.com/hostednews/ap/article/ALeqM5hLKyB9H7lUpiALFVlU7RRJa9-EfwD9GLKOT80
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