An Extension For Closing?

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Apparently the $8000 tax credit for home purchases was a success. In fact, it was so successful that right now it is estimated that as many as 180,000 of these people are in danger of not being able to close on time in order to meet the June 30 deadline.

And rules may be rules but if you know anything about real estate closings you know that there are any number of things that can delay a closing. Delayed closings are common in any market.

But now there are even more extenuating circumstances. Many homes are short sales and foreclosures, which brings in the additional complication another mortgage holder, either the underlying mortgage holder of the sellers note, in the case of a short sale, or the actual owner of the property in the case of a foreclosure.

And because of the tax credit, there are more closings scheduled than usual.

A real estate closing takes the cooperation of many people in order to make it go through to closing. There is the buyer and the Realtors, first up, but after that you have the buyers mortgage company, the title company and these days an additional mortgage company who either holds the underlying mortgage note for the sellers or is the actual owner of the house, but either way is not generally in the business of cooperating in that manner. It is difficult to get signatures and cooperation from these mortgage companies because they are in the business of lending money, not selling homes or negotiating to take less money than what they are owed. Bottom line is that after the initial paperwork of the REPC or the Real Estate Purchase Contract, the buyer has little to no control on how or when the sale will close.

But if these homes don’t close by June 30 and there is no extension, the buyers will lose out through no fault of their own.

So Senate Majority Leader Harry Reid (D-Nev) along with Johnny Isakson (R-Georgia) (yep, that would make in bi-partisan!) and Chris Dodd (D-Ct) has co-authored a bill that would give an extension for closing on the tax credit from June 30, 2010 to September 30, 2010.

Read about the bill at the Washington Post. And cross your fingers. This one needs to go through.