Tax Credit Closing Deadline and Flood Insurance Program Extended Through Sept. 30
Before adjourning for its week-long July 4 recess, Congress approved legislation extending the home buyer tax credit and the National Flood Insurance Program (NFIP) through September 30.
On July 2, President Obama is signed The Homebuyer Assistance and Improvement Act of 2010 into law. The extension only applies to those home buyers who had a binding sales contract in place prior to May 1, 2010.
For home builders and lenders, this legislation provides an additional three months to complete construction and backlogged paperwork in order for home buyers to close on the home and still receive the tax credit. The $140 million cost of the extension is completely paid for by several small revenue raisers, including a provision that increases the penalties associated with bad electronic payments of tax liability.
As of May 22, the Department of the Treasury indicates that for the tax credit program as a whole, more than 3 million home buyers have claimed the credit for a total tax savings of more than $21 billion. The extension will help thousands of otherwise qualified home buyers claim the credit for sales that weren't able to close in time due to conditions beyond the buyer's control.
Also on July 2, President Obama signed into law the National Flood Insurance Program (NFIP) legislation to extend the program through September 30. The program has been suspended from issuing new policies since May 31, forcing many home buyers to delay or cancel closings due to the inability to obtain NFIP insurance for a mortgage. In other instances, builders were forced to stop or delay construction on a new home due to the lack of flood insurance approval, resulting in unnecessary delays and job losses. The reauthorization of the NFIP is retroactive to June 1, the date the program was halted.
With the arrival of the hurricane season, NAHB has been urging lawmakers to reauthorize a long-term extension of the program to ensure the nation's real estate markets operate smoothly and without delay.