Rockland Applauds Deadline Extension for Homebuyer Tax Credit

The U.S. Senate beat the clock Wednesday and helped about 180,000 recent homebuyers by agreeing to extend until Sept. 30 the deadline for the homebuyer's tax credit.

The credits, $8,000 for first-time homebuyers and $6,500 for current homeowners, allow those who receive it to get 10 percent of the home's purchase price up to the maximum credit on homes priced at $800,000 or less.

The home had to have had a binding sales contract by April 30. Originally, the completion of the sale had to be done by June 30 in order to qualify for the credit. Now, the homebuyers have an additional three months to get their financing and close the sale.

The National Association of Realtors estimated about 180,000 homebuyers across the country would have missed Wednesday's cut-off date to qualify for the credit. Locally, that number is unknown, but several local Realtors said they had clients who would have missed out on the credit if the deadline wasn't extended, and they were very happy an extension was worked out by Congress.

"It's a great thing that they're extending it," said Drew Kessler, of Rand Mortgage in New City. "It will add people to the mix who wouldn't have gotten it."

"I'm very pleased and extremely happy for the people under contract who will have the ability to attain the credit due to the extension," said Michael Galgano, of IBNA Real Estate Group in New City.

"It's one step in the right direction," said Debbie Russo, of Century 21 in New City. "Why should someone miss out when you have a rush to close all these loans and the banks have tight stipulations on credit and don't have enough people to handle all the closings."

The type of sale that would have been most affected by the lack of an extension was the short sale, Galgano said.

A short sale is when the homeowner can't afford to pay their mortgage and the lender and homeowner agree to sell the property at an amount less than what is enough to pay off the loan in order to avoid foreclosure, which is a more costly and time-consuming measure.

While most home closings take between 30-60 days, a short sale typically takes between 60-120 days, putting the June 30 deadline date at the beginning of that timetable for homes with contracts by the April 30 date but well within the time needed by the new Sept. 30 deadline.

Foreclosure sales and new home construction also will benefit from the extended timeline, Kessler said.

Kessler agreed with Russo one of the reasons for the delays in finalizing deals was because of the lending institutions. Between tougher underwriting guidelines put in place after the financial crash of 2008 and less staff in place to process applications, "the banks are not equipped to handle the influx of loans," he said.

Robert Burns, a senior mortgage consultant for HSBC Mortgage Corp in Nyack, said banks have been "overwhelmed" by applications and the extension is a "godsend."

"We were so backlogged it was amazing," he said. "I had no idea how we were going to get them all done."

A combination of increased applications, tougher underwriting guidelines and additional paperwork combined to make processing the loans more time-consuming, he said.

"The pendulum has swung from the far left to the far right – there's no gray area (when it comes to approving loans)," Burns said.

Burns, like some area Realtors, would have liked to have seen the program extended, at least until June 30 since the spring is a prime homebuying season. That would have helped more Americans who need it during these difficult financial times.

Still, the credit will provide some of that help, Kessler said. He believes the money could be used on home expenditures, like new appliances or furniture, which may not have been made without the credit.

"I believe that money will go right back into the economy," he said.