Congress just passed, and President Obama is expected to sign, an extention and expansion of the popular First Time Home Buyer's Tax Credit.
The extention would be on homes "ratified" by April 30, and settled by June 30, 2010. Anyone who hasn't owned a home as a primary residence in the last 3 years, and first time home buyer's would be eligible for up to an $8,000 tax credit. There are income maximums to qualify.
The expansion of the bill would go to home buyer's who have lived in their current homes for at least 5 years, and are looking to purchase another primary residence. These buyer's would be eligible for up to a $6,500 tax credit.
This is a big boon to "short seller's", those who owe more on their mortgage then their home's are worth. Many of these "short sales" are languishing in big bank's loss mitigation department's, as frantic home buyer's and seller's rushed to beat the November 30 deadline.
Now, a temporary sigh of relief can be heard through out Northern Virginia and the nation, as the pressure to perform will at least be lifted for the time being.
However, an "average" short sale can easily take up to 4 months and beyond, after"ratification" or signing and delivery of contract, and it is not uncommon for short seller's who have 2 mortgages with 2 different banks to expect an even longer settlement.
Numerous complaints about big bank foot dragging, was a major reason for the extention and now the feds have stated there will be more of a crack-down on banks deemed to be "out-of-compliance" with current and future reglatory reform.
This bodes well for short seller's, who have a legitimate hardship, such as losing a job, or a reduction in hours, and are struggling with their monthly mortgage payments. Ideally, a "loan modification" is the best bet if your bank will allow it.
If not a "short sale" could be a solution, albeit not a great one, however it is still better then a "foreclosure" which will remain on your credit for many more years.