There was a tremendous response to a blog that I posted last week regarding the possible extension of the first time home buyer tax credit. We received over 50 comments, most of them from potential home buyers who have a deal in place but are having difficulty closing on their home prior to June 30th.
Almost without exception, these commenters are dealing with servicers, underwriters, processors, and lenders who are severely backlogged because of the huge spike in mortgage volume that occurred prior to the April 30th expiration of the tax credit. According to a video on MSNBC today, as many as 20 percent of those who signed contracts prior to April 30th may not be able to close by June 30 in order to claim the tax credit.
As a result, Sen. Harry Reid (D-NV), proposed an amendment to the American Jobs and Tax Loophole Closing Act of 2010 that would extend the closing date to claim the tax credit three months to September 30th. Earlier in the week it appeared that the bill was unlikely to pass, due to the fact that there are a lot of other provisions in the bill that would extend a variety of other tax breaks and unemployment benefits that would add about $80 billion to the deficit over the next decade.
It now appears that an amendment from Sen. Jon Tester (D-MT) that would reduce the cost of the bill was enough of a compromise to bridge the gap between the parties. Harry Reid called for cloture on the measure, which would end debate and force a vote on the bill. The Senate will likely vote on it before next Monday. If the bill passes, it would go back to the House of Representatives for a vote on the Senate amendments to the bill.
According to reports, Senate Democrats are confident the bill will pass. There are only two weeks before the original expiration date, so Congress will need to move uncharacteristically fast in order to enact this legislation. I will do my best to stay up to date on all the newest happenings with this legislation and pass them along in this space. Stay tuned.
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