The First time buyer tax credit settlement deadline extension isn’t dead yet.  As of late last week it was on life support due to being grouped in the same bill with extended benefits for unemployed workers.  Republicans rejected the bill due to fears of creating an even larger government deficit.  The new bill, independent of the unemployment benefits, was approved in the house with an almost unanimous vote.  The bill is currently on the way to the senate for final approval. 

Many “tax credit buyers” have their fingers crossed as they wait for the results of the vote in the senate.  Two months seemed like a reasonable time frame to get from ratified contract to settlement, but these aren’t normal times.  Realtors, lenders, and lawyers are facing many difficult scenarios ranging from appraisal discrepancies, permit issues, short sales approvals, and any potential problem associated with a foreclosure purchase.  All of these items can cause potential delays in settlement times. 

It is estimated that some 180,000 buyers are hoping for an extension so that they will receive the $8000.00 they were hoping to get by settling before 6/30/10.  The proposed extension would extend the settlement deadline until September 30th, 2010 at midnight.  This would provide an addition 3 months for buyers to deal with any problems that may have pushed the their settlements passed the expected deadlines. 

It has been mentioned that some sellers might decide to walk away from these tax credit deals as time frames are stretched passed the original settlement dates.  While this is a possibility I predict that most sellers understand the state of the market and the somewhat limited numbers of buyers that are currently available and will be accommodating to the buyers and pending contracts.

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