Congress Passes Extensions – Homebuyer Tax Credit & Flood Insurance

Good news!  On Wednesday the U.S. Senate approved a bill extending the closing deadline for home buyers trying to take advantage of the tax credit.

The Senate approved the bill that extends the closing deadline for eligible home purchase contracts.  On Tuesday the U.S. House of Representatives passed the bill, and it now goes to President Obama for his signature.  The deal will give home buyers with contracts signed by April 30, 2010 until September 30, 2010 to close on their purchases and still get the tax credit, which is $8,000.00 for first time home buyers and $6,500.00 for homeowners buying a new primary residence.

In addition, the U.S. Senate has passed the National Flood Insurance Program Extension Act of 2010 (H.R. 5569) an extension of the National Flood Insurance Program until September 30, 2010.  This will allow transactions to move forward.  The bill is retroactive and covers the lapse period from June 1, 2010 to the date of enactment of the extension.

For more information please contact me at (305) 329-4929 or solovay.m@ewm.com.

Under a decision announced last week, the U.S. Department of Housing and Urban Development (HUD) will allow eligible first-time home buyers to use the tax credit authorized under The American Recovery and Reinvestment Act of 2009 during the actual home purchasing process.   However this Mortgagee Letter 2009-15 issued on May 11th appears to have been rescinded effective May 13th.  So in short, as it stands currently first time home buyers may not use the $8,000 tax credit as part of their down payment.

If mortgagee letter 2009-15 is to be reinstated buyers and real estate professionals need to be aware that loan programs that would accommodate this development will not be available immediately.  There are many considerations that need to be addressed such as FHA and Conventional underwriting guidelines, secondary market saleability and pricing issues just to mention a few.

For now the down payment will need to come from the buyers own funds and/or as a gift from a family member when underwriting guidelines permit.