Congress may give home buy­ers chance to save deals

The Kansas City Star (Sunday) - - RINGING UP RUMORS BUSINESS - By KEVIN COL­LI­SON

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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For more lo­cal busi­ness news, go to KansasCity.com for the Dol­lars & Sense blog.

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 kcol­li­son@kc­star.com.

CHRIS OBERHOLTZ | KANSAS CITY STAR FILE PHOTO

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