In Congress, July 1, 2010...
Attorney Richard D. Vetstein. describes that two extensions passed by Congress and what they mean for people waiting to close on some properties.
Congress gave home buyers some good news before the July 4th holiday weekend.Home Buyer $8,000 Tax Credit Deadline Extended to September 30
At the eleventh hour, Congress approved an extension of the June 30 home buyer tax credit closing deadline. Buyers now have until September 30 to close their transactions, however, a purchase contract must have been signed by the original deadline of April 30th. President Obama has signed the measure.
Most conventional transactions qualifying for the credit closed in a flurry last week, as Congress was still debating the measure on the deadline day, so the extension was too late. But thousands of short sale and foreclosure related transactions were unable to close by the June 30th deadline, so the extension will breathe some life into that market segment.Flood Insurance Program Restored
Even better than the tax credit was Congress’ move to restore funding for the federal flood insurance program which had run out of money on May 31. Perhaps Congress read my prior blog post on this situation! The President has signed the bill.The Senate has passed the funding extension until September 30, 2010. This will allow transactions to move forward. The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension. It’s a short term fix, but it will get closings completed for homes in flood zones. Congress will have to revisit the situation in September.
Both of these measures help closing attorneys get property closed. These two things are not the same, are they?
The tax credit deadline extension helps buyers get what they expected -- their $8000 credit -- when they did what they needed to do – have a contract for purchase by April 30, 2010. The deadline gives their attorneys, the title companies, and the short sale negotiators more time to get the paperwork ready for closing. It does not add to the number of new sales contracts at all. It seems fair to me that buyers who had a purchase contract by April 30th should not lose because of bureaucratic delays on their purchase. This is a finite pool of transactions.
The flood insurance program is a whole other kettle of fish (or bucket of water?) The vote in Congress affects sales that are pending, retroactively, as well as any other sale that could happen before the deadline.
Floods happen and flood zone maps change. This is not finite. How can the government stay in the flood insurance business? Should it be trying to do this? What is the solution for homeowners who are literally under water? Will houses in flood zone areas become unsellable at some point? Would you buy one?
