Senate OKs New Tax Credit Closing Deadline- Will it Become Official?

Real Estate Agent with Coldwell Banker Residential Properties

The Senate, with a vote of 60-37, accepted an amendment by Democratic Leader Harry Reid that extends the closing deadline to September 30 for buyers who met the April 30 deadline to have a signed contract.

Backers of the amendment cite a backlog of 180,000 homebuyers as the reason for extending the deadline.

The Senate’s decision is step one in helping future homeowners to obtain the upt to $8,000 credit. Originally, any buyers had to have been in contract by April 30th, and close on their home by June 30, which is just a little over one week away.

“Extending the deadline for closing from June 30 to Sept. 30 would allow lenders more time to approve the mortgages,” said amendment sponsor Sen. Harry Reid, D-Nev.

The amendment was added to the "American Jobs and Closing Tax Loopholes Act of 2010" which primarily extends unemployment insurance benefits. The vote was mostly along party lines, with only four Republicans in favor and one Democrat opposed.

The National Association of Realtors supports the amendment, saying Realtors have reported that as many as one-third of qualified applicants have been told by lenders that their loans will not close before June 30 because of the sheer volume of loan applications in the pipeline.

The amendment does not extend the deadline for homebuyers to qualify for the tax credit, NAR said in urging lawmakers to approve it, but simply extends the deadline for closing transactions already in contract.

"Since these applications were already in the pipeline and figured into the program's cost, the extension of the closing deadline should not incur any further government costs," NAR President Vicki Cox Golder said.

There has been some speculation that some homebuyers will attempt to submit fraudulent claims for the tax credit by backdating documents showing they were under contract by April 30, and that extending the deadline for closing would expose the government to more fraudulent claims.

Now the bill moves on to the House for approval.

Do you think the extension will be approved?

Do you think Congress should bring back the Homebuyer Tax Credit to help with business? According to one source, sales dropped dramatically in May citing the expiration of the tax credit.

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