Syracuse, NY--Some home buyers who rushed to sign sales contracts to meet an April deadline for an up to $8,000 tax credit, may not get their money after all. Home buyers hoping to get the tax credit have until June 30 to close their deals. But late Thursday, the U.S. Senate failed to pass a bill that contained an amendment...
Syracuse, NY--Some home buyers who rushed to sign sales contracts to meet an April deadline for an up to $8,000 tax credit, may not get their money after all.
Home buyers hoping to get the tax credit have until June 30 to close their deals. But late Thursday, the U.S. Senate failed to pass a bill that contained an amendment that would have extended that deadline to Sept. 30.
Now the pressure is on for thousands of home buyers, including some in Central New York, to close on a new home in the next three business days. The National Association of Realtors estimates up to 180,000 people nationwide, or about 30 percent of those eligible for the credit, won’t close in time to receive it.
It’s hard to say how many people locally will miss the deadline, but Don Radke, president of the Greater Syracuse Association of Realtors said the numbers will likely match the national figure of 30 percent.
“There’s going to be people who aren’t going to make the deadline,” he said.
Many realtors and real estate lawyers contacted by The Post-Standard last week said they have clients who won’t close before the deadline.
Nathan and Kathleen Sokolowski signed a contract in January to buy a house on Sayles Street in Oneida. They signed well ahead of the April 30 deadline.
They were quickly approved for their mortgage, but issues surrounding the home’s title history arose and a legal ping-pong match began, Nathan Sokolowski said in an email.
“Days, then weeks, and months went by as we waited,” he said.
In the meantime, the couple married on June 5th, and told their landlord they’d be out of their apartment by Monday.
Finally the legal tape was cut away, and the couple is scheduled to close on their house Tuesday, a day before the federal deadline.
“We are closing on time, but it looked like we would be homeless for sure had things not panned out as they did!” Sokolowksi said.
The American Recovery and Reinvestment Act of 2009 offered first-time home buyers an $8,000 credit for purchases made before Dec. 1, 2009. Then Congress passed a second law, the Worker, Homeownership and Business Assistance Act of 2009, which extended the deadline to April 30 and added a $6,500 credit for repeat home buyers.
Buyers had to close their deal by June 30.
Just as there was a rush of people signing contracts before the April deadline, now there is a crush of paperwork at banks and mortgage lenders to meet the Wednesday deadline.
Meeting the deadline is a top priority for M&T Bank , which added extra staff hours to take care of its backlog of mortgage applications, said Chet Bridger, vice president of corporate communications.
“In cases where borrowers have been able to meet all of the requirements of their loan, we expect get those loans closed by June 30,” he said.
Buyers were told when they signed contracts in April that they would be able to close the deal in six weeks, said Tami Hoffman, an associate broker with Century 21 Tucci Realty. Now it’s dragging out to eight weeks and many are nervous that they won’t be able to close their deals in time to get the credit, she said.
Realtors are making daily phone calls in an effort to push the process along, Hoffman said. “The banks seem to be so overwhelmed, they’re doing the best that they can,” she said.
Missing the closing deadline will cause a cascade of problems if buyers pull out of deals that sellers were counting on to finance their own move to a new home, said Kevin Pole, a partner in the real estate department at Bond, Schoeneck & King
“$8,000 is a lot of money. People are counting on that as part of their transaction. If they can no longer afford the house, then we’ll have a mess on our hands,” he said.
Most of the problems around the country are occurring in markets where prices skyrocketed and then plummeted during the recession, said David B. Jones, a real estate lawyer with Melvin & Melvin.
Banks must now decide if they’re willing to cut their losses and sell properties for less than the mortgage. Many are taking time to make those decisions, he said.
The market in Central New York didn’t have the same price spikes. “Here the delays we’re having are due to the volume. People are in a pile and there are only so many loans that can be processed in a day,” Jones said.
Contracts in Onondaga County are normally written with some flexibility allowing people to close on or about a certain date, he said. “When we get a hard deadline like this it sort of shocks the system.,” Jones said.
As of Thursday, Jones had four or five clients waiting to close by June 30 to meet the tax credit deadline.
Jones and others hold out hope that the Congress will come to the home buyers rescue.
The likelihood of that happening grew dimmer Thursday when the Senate failed to pass amendment extending the deadline as part of a jobs bill.
“There’s no word yet on what’s going to happen now,” Lucien Salvant, managing director of public affairs for the National Association of Realtors said Friday. “The drama mounts.”
Congress breaks for the Fourth of July holiday next week, and if it doesn’t take up the extension before then, “it’s gone,” he said.