Congress has approved separate stand-alone bills that extend the closing deadline for claiming the federal homebuyer tax credit and temporarily reinstate the National Flood Insurance Program — both are issues of paramount importance to tens of thousands of homebuyers trying to close deals under contract.
Legislation that extends until Sept. 30 the closing deadline for claiming the homebuyer tax credit — HR 5623, the Homebuyer Assistance and Improvement Act of 2010 — was passed by the Senate by unanimous voice vote Wednesday and could be signed into law by President Obama today.
The House passed HR 5623 in a 409-5 vote on June 29, after another bill extending unemployment benefits that was amended to extend the closing deadline became bogged down in the Senate.
The Senate had originally intended to use that bill, HR 4213, the American Jobs and Closing Tax Loopholes Act of 2010, to reinstate the National Flood Insurance program. The program expired May 31, derailing many closings.
Instead, the Senate on Wednesday passed HR 5569, the National Flood Insurance Program Extension Act of 2010, by unanimous voice vote, as House lawmakers did on June 23.
Both bills will apply retroactively. Homebuyers eligible to claim the tax credit who were under contract by April 30 now have until Sept. 30 to close the deal.
HR 5569 is only a temporary fix, authorizing a three-month extension of the National Flood Insurance Program to Sept. 30. But new policy applications or renewals signed and submitted while the program was suspended will be effective from the date of application.
According to the National Association of Realtors, the program provides insurance to homeowners in more than 10,000 communities that are prone to flooding who otherwise would not be able to obtain coverage due to cost or ineligibility.
NAR lobbied lawmakers on both issues. In a blog post, Realtor Magazine editor Robert Freedman said 85,000 NAR members sent letters to their Congressional representatives over the last month urging them to take action.
In a letter to House leaders Tuesday, NAR said as many as 75,000 buyers and sellers were still awaiting bank approval of short sales, or coping with other delays caused by third parties handling their closings. Some sellers whose homes were damaged in natural disasters were also experiencing "significant delays" as they repaired homes that were under contract, NAR said.
NAR had previously estimated that as many as 180,000 homebuyers who were under contract by April 30 might miss the June 30 closing deadline for claiming the homebuyer tax credit.
Also on Wednesday, a stripped-down version of the bill to extend unemployment benefits, HR 4213, fell two votes short in the Senate of the 60 votes needed to end debate on the bill. Congress is not expected to resume debate on the bill until after the July 4 recess.