The End of June TAX CREDIT CRUNCH!!!

Tax Credit Fever!!!

So...the end of June is fast approaching, and the last of the buyers who wanted to take advantage of the First Time Homebuyer and Move Up Buyer Tax Credits are praying that their loan funds before the 30th. I have a few questions, and some advice from the perspective of a Lender.

First...Advice:

1. As a Buyer or Realtor involved in a transaction where a tax credit is involved, be very diligent in your correspondence with the lender. As the end of the month nears, some Lenders may run into a capacity issue when trying to fund all these loans at the same time. This may cause delays in funding that could push the closing until after the 30th, hence negating the tax credit eligibility. Not to mention the amount of paperwork that has to be filled out, reviewed, reviewed again, funds wired and deeds recorded. If it is a domino transaction where the purchase is contingent on the sale of a home, then you have to make sure you are talking to both Lenders and agents involved to make sure there are no delays.

2. If at all possible, try to get your clients in to sign early. Most Lenders will take fundings on a first come first serve basis, especially in this unique circumstance. We usually try to prioritize fundings on a need basis, but in this situation this will likely be impossible since everyone needs the same things on the same days.

3. If your buyer was depending on the USDA Rural Development Program to purchase their home, and were not able to get it done before USDA funds ran out, USDA has had an injection of money from the federal government to keep the program afloat. However, there have been some changes in the program that have to be followed in order to fund loans under the new guidelines including an increase in the Guarantee Fee and new Commitment Letters need to be issued before a Lender will fund the loan. So again, eluding back to my first advice, contact the Lender and make sure everyone is on the same page to prevent delays.

Next...Questions:

1. What do you all see as possible ramifications of a purchase getting delayed past the June 30th cutoff date where the buyers may have borrowed their down payment from a family member with the caveat that they would be paid back after they received their tax credit? Your answers could be legal, personal, or business related.

2. Do you think the Govenrment should have extended the credits at least until the end of the year instead of stopping them in the middle of what is historically the bussiest time for home sales?

3. What do you see is going to be the trend in home sales beginning August?

I truly believe this is a time for us as Agents and Lenders to really show what we are made of and take advantage of an opportunity to show our clients how hard and well we work for them. If we do it right...I think that referrals should naturally follow.

Good Luck out there!!! -Brad Patshkowski-

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