Congress may give home buyers chance to save deals
It looks to extend deadline to wrap up closings under tax-incentive program.
Kansas City home buyers scrambling to close on their transactions today to grab generous federal tax incentives may receive a last-minute reprieve from Congress.
A program that offered $8,000 in tax credits to first-time buyers and $6,500 to other qualified buyers had required contracts to be signed by April 30 and sales closed by June 30. But the plan’s success — an estimated 1 million home sales nationwide that otherwise might not have occurred — has swamped banks and title companies.
“We’re scrambling to get them done,” said Donna Gambrill of Kansas Secured Title. “It’s been a little crazy.”
Congress may be about to give buyers a 90-day extension to wind up business. By a 409-5 vote, the House on Tuesday passed a bill to push back the deadline for closing until Sept. 30. The Senate was expected to take up a similar measure.
Judy Maynard, a loan originator at Mortgage Alliance Corp., was working to help clients close on their home purchases Tuesday before word of the House vote.
“I have one that’s a first-time buyer that has to be out of his apartment today,” she said. “I think it’ll come together, but it’s nervewracking and they are going through a lot. I don’t know if two others are ready.
“The whole system is taxed and another 30 days would give us enough time to close in a comfortable fashion.”
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The National Association of Realtors, which had been pressing Congress to extend the closing deadline, estimated that 180,000 home buyers nationwide would be left out in the cold if today’s cutoff stayed in place. Of those,1,840 were in Kansas and 3,600 in Missouri. “These are not buyers who just entered into the market,” Vicki Cox, association president, said in a statement. “These are buyers who previously met all the qualifications for the tax credit, but find themselves at the mercy of a workflow jam … and might not be able to complete the purchase of their homes by the current deadline.”
People in a particular jam are those who signed contracts for “short sales,” offering less for a home than the amount remaining on the existing mortgage. Banks need more time to review such transactions.
“Everything that we wrote has been able to close,” said Linda Burwell, a Realtor for Reece & Nichols in Liberty. “The reason we wanted the extension is for short sale. Banks can’t move at that speed.”
Susan Thomas offered $80,000 for a house in the Troostwood neighborhood of Kansas City that has been vacant for two years. The deal was moving along until the bank did an appraisal that valued the property at $90,000. A planned June closing has now been pushed back until September.
She lost her job in February 2009 and while she has found a new position since then, it pays far less than her previous work. Without the federal tax credit, Thomas could not pull off the transaction.
“Without this extension, I can’t complete the deal and it would go into foreclosure,” she said. To reach Kevin Collison, call 816-234-4289 or send e-mail to email@example.com.