Bright and early this morning — okay 8:30 a.m. — Senate Majority Leader Harry Reid (D-NV) introduced HR 5623 to the Senate floor.
The bill is currently slated to be voted on Thursday, July 1, unless the minority and majority can agree to bring it to a vote this afternoon.
James Madison eternally extending his hand to assist home buyers with a tax credit (Nate Brelsford/sxc)
What is HR 5623?
HR 5623 is an amendment to the United States Tax Code of 1986 to allow the extension of the home buyer’s tax credit for another three months to September 1, 2010.
This doesn’t add any new people to the tax credit it simply allows those currently in the pipe line to complete their transactions. The number is estimated at 150,000 buyers are being left-out of the tax credit due to issues within the banking industry.
They Had 60 Days to Get This Done
That is exactly correct. Buyers had to be in “firm” contract — have everyone’s signature — by April 30 to qualify for the tax credit. However the lending industry wasn’t prepared for the onslaught of buyers.
- Less Lending Options – With the great bank mergers, buyouts, and failures of the past five years it is a fact that there are less “real” options for those shopping a loan today.
- Smaller Staffs to Process – As most businesses have trimmed their workforces and the loan processing centers have been exactly the same way. Which has led to a major bottle neck in the processing centers as they attempt to get the loans completed by 11:59 p.m. tonight.
- Tighter Lending Regulations – This is not a bad thing at all. There are those considering buying a home that need to keep considering. However, the fact is that the process is now taking longer it used to. Traditional sales are taking 45 days to close on a regular bases – compared to 20-25 days as little as a year ago.
It has created a perfect storm. And unfortunately without a “aye” vote today there ship will be sunk.
The Extension is Adding to Fraud
“Over 1000 prisoners filed for the first time home buyer’s tax credit,” Senator Jim DeMint (R-South Carolina) said this morning on C-Span2. And while, I can’t argue with him that this was true, my argument would be that we know about this due to the IRS’s diligent and hard work.
If I was committing fraud to claim the home buyer tax credit, I would already have finished it. There is going to be an increased likely hood of those after the extension to be tagged.
I’m not a fan of the tax credit – never have been – but this is about how we treat those that we’ve offered a benefit to — and they’ve done everything they need to do to earn the tax credit. But they are being penalized because of someone else.
