Legislation containing a three month extension of the popular

homebuyer tax credits that would allow buyers to close by September

30th died in the Senate last night and the opportunity to extend the

credits past the current deadline of June 30th may have passed.

 The National Association of Realtors estimates some 75,000 first-time

and repeat buyers need the three month extension on closing in order

to qualify for the credits.  Short sales, which require the lender to

agree to take a loss on the seller’s mortgage, generally take much

longer to close than standard sales, and as many as 15 percent of

distressed property sales currently are short sales.

 New-home contracts rose 30 percent in March and 15 percent in April,

the biggest two-month gain in records dating to 1963, according to the

Commerce Department. About a third of the April signings were for

homes under construction, and a quarter were for those that weren’t

started.  Builders are working day and night to complete homes before

the deadline next Wednesday at midnight, but many won’t make it.

 Without the legislation to extend the closing deadline, buyers will

not be able to claim the credits even though they met the April 30th

deadline to have their offers accepted by sellers.  Credits are worth

up to $8000 to a first-time buyer and $6500 to a repeat buyer.  The

failure of the extension will leave thousands of buyers committed to

buy homes without the benefit of a credit.

The homebuyer credits were attached to a Democratic-backed jobs and

economic relief bill that collapsed in the Senate after failing for

the third time.  The defeat underscores the changed political climate

in Congress over spending and deficits.

 Despite major concessions, GOP moderates refused to cross the aisle to

help Reid and Senate Finance Committee Chairman Max Baucus (D-Mont.)

get the 60 votes needed to cut off debate. In the course of these

talks, the size of the package was cut in half, and, to reduce the

impact on the deficit, Democrats even went so far as to pay for state

Medicaid assistance by cutting about $10 billion from future food-

stamp benefits.

 

Senior Democrats in the Senate told the Washington Post they will

probably try again to attract GOP support for the employment benefits

measure, which Obama has called critical to avoiding the layoffs of

hundreds of thousands of state workers and propping up the nation’s

still-fragile economic recovery. After four months of talks,

frustrated senior Democrats said they are likely to delay further

action until after the July 4 recess.

“People are in the mood of letting the dust settle before finding the

next step,” said Budget Committee Chairman Kent Conrad (N.D.).

When Congress resumes July 12, the dust may be settled but thousands

of credit-driven home sales won’t be.