By Robert Freedman, Senior Editor, REALTOR® Magazine
Almost 85,000 of you sent letters to your members of Congress over the last month or so to get them to do what by any measure is the right thing to do: give your clients more time to close on their deals so they can get the home buyer tax credit. President Obama signed the legislation into law a day later. Your calls also helped spur Congress to renew the National Flood Insurance Program.
The tax credit deadline extension was needed because of the high percentage of transactions today that are short sales. You know better than anyone how long these transactions can take, so clearly anyone who had a ratified contract submitted by April 30 would be challenged to get that purchase closed by June 30, the original deadline date. That two-month time frame only makes sense for buyers who are buying under normal conditions. And short sales haven’t been the only problem. Many lenders have simply been handling more applications than they could handle in a timely fashion.
The tax credit was a short-term program so you would expect hiccups like what we saw with the mismatch between the contract submission deadline and the closing deadline. But flood insurance renewal is a different matter. Few people would disagree that Congress needs to give the program a thorough look, and indeed NAR has been out front in calling for commonsense reforms that improve the program’s efficiency and its fairness. But there doesn’t need to be a disconnect between reviewing the program with an eye toward improvement and keeping the program going so routine transactions can get completed. Both can and should be done at the same time, especially today, when improvements to real estate markets remain fragile. (See the 3-minute video interview above with NAR Chief Economist Lawrence Yun on today’s release of pending home sales figures.)
No one wants to see households unable to close on the purchase of their house just because they got snagged in a temporary lapse of national flood insurance authority.
In acting on both of these issues, lawmakers took the steps almost 85,000 of you asked them to do. That’s a clear indication of how much importance lawmakers put on your communications to them. Of course, neither is law just yet. Importantly, both pieces of legislation were structured so that there is no gap in coverage between passage and implementation (except that, with flood insurance, applicability will be retroactive).
We could also see very soon renewal of the popular Section 502 rural housing mortgage finance program. That’s another program whose lapse has snagged households who are just trying to buy a house and are rightly expecting to use a federal program that has become a mainstay of the market.
It would certainly be better if authority for programs such as flood insurance and rural housing finance wouldn’t be allowed to lapse. But it’s reassuring to know that when you talk, lawmakers listen. There will be a lot of households that stand to be better off because you raised your voice.