NAR will push hard during the coming weeks to assure that the first-time homebuyer tax credit is extended beyond its current December 1 expiration. Under current law, homebuyers will be eligible for the credit only if they are able to complete their purchase (i.e., go to closing) before December 1, 2009. This requirement intensifies pressure on purchasers and on real estate licensees and lenders as that deadline approaches. NAR is deeply concerned that prospective purchasers, even those with binding contracts, could be denied the credit through no fault of their own. Senior members of the tax-writing committees are aware of these concerns and have noted the dangers of delay.
NAR informal surveys suggest that, depending on the market, transactions are taking anywhere from 30 to 100 days to get to closing; short sales take even longer. Accordingly, NAR has begun an intense campaign that will have major grassroots components to secure an extension of the credit as soon as possible to avert a slowdown in the market.
According to the Puget Sound Business Journal on September 17th, the Internal Revenue Service reports that 26,000 residents of Washington state have taken advantage of the $8,000 first-time homebuyer’s credit offered by the federal government. The tax credit program expires December 1st, and IRS officials report that if homebuyers want to qualify for the program, they need to close on a home by November 30. To date, nearly 530,000 Americans have applied for the tax credit according to data from the U.S. Treasury.
Continued weakness in consumer spending will help drain another $238 million for the state’s coffers. The drop-off in tax receipts likely means more state budget cuts when the legislature reconvenes in January. Governor Gregoire did not mention tax increases as an option to bridge the deficit, and legislative budget leaders also downplayed the likelihood of tax hikes. Overall, the revenue decline pushes the state’s balance sheet about $430 million into the red for the budget that runs through mid-2011.
Mortgagee Letter 2009-19 provided guidance on the new approval process for condominium projects for mortgages insured by the Federal Housing Administration (FHA). The rule effectively places condominium projects in FHA's 203(b) Single Family Program. This new approval process was effective for all case numbers assigned on or after October 1, 2009. However, the new effective date is for case numbers assigned on or after November 2, 2009. The site condo and manufactured housing condo project changes that have already taken effect are not affected by this delay.
On July 31, 2009, NAR President Charles McMillan sent a letter to FHA Commissioner David Stevens recommending enhancements to the new condominium rule. Mr. McMillan also discussed NAR's recommendations at a meeting with the Commissioner on September 8, 2009. NAR is calling for: 1) a reduction in the owner-occupancy requirement, 2) eliminating or increasing the FHA concentration limit, 3) reducing the pre-sale requirement, and 4) clarification of the reserve study requirement.
NWREporter November 2009