WASHINGTON – The U.S. House of Representatives voted Tuesday to give homebuyers who qualified for a federal tax credit more time to settle on their pending purchases.
The House voted 409-5 to extend the deadline for closing home purchases to Sept. 30. The program initially required borrowers who signed contracts before April 30 to complete paperwork by July 1 to get a tax credit of as much as $8,000.
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The House measure accommodates borrowers at risk of being disqualified for the tax credit because lenders and loan servicers aren’t processing mortgages quickly enough. The Senate is considering similar legislation.
“We owe this to the people who have essentially followed the rule who are caught by a closing date,” House Ways and Means Committee Chairman Sander Levin, D-Mich., said before the vote.
As many as 180,000 homebuyers would lose their tax credit if Congress fails to push back the date, including up to 500 in Rhode Island and 3,930 in Massachusetts, according to the National Association of Realtors, which sought the extension. Transactions at risk include as many as 75,000 short sales, or homes being purchased for less than the existing debt on them.
The tax credit may have fueled a temporary increase in home sales, which fell after the April deadline passed. New-home sales dropped 33 percent to a record low of 300,000 in May, the Commerce Department reported. Applications for loans to purchase properties fell at the end of May to the lowest level since 1997, according to the Mortgage Bankers Association.
PBN Web Editor Ted Nesi contributed to this report.
