(NECN: Peter Howe, Boxborough, Mass.) With a vote Tuesday by the U.S. House, it's now up to the Senate to save as many as 8,100 New Englanders from losing their $8,000 first-time home-buyer tax credits -- like Dan Cannon and Steve Ennis.
The two men are among thousands of people who signed up for the opportunity to get the $8,000 tax credit for buying a first home, so long as they submitted a binding purchase offer by April 30 and completed the purchase by June 30.
The problem is: June 30 is tomorrow, real estate lawyers and mortgage brokers and lenders across the country are jammed up with business, and unless the Senate acts, many people may lose the $8,000 credits they were counting on because of last-minute transaction glitches that will prevent them from closing by the end of the day Wednesday.
Cannon, a quality manager with National Technical Systems Inc. in Boxborough, is about to get a classic piece of the American Dream. He and his wife and her sister are buying a two-family home on a leafy side street in West Medford. "We're really excited,'' Cannon said. They've been renting an apartment in Malden, Mass., and now with a month old boy named Trent, "We're excited to get our first home together.''
A big piece of making the $500,000 purchase work for their budget and finances, he said, is the $8,000 first-time home buyer tax credit. "We're certainly stretching ourselves in our savings, so we're sort of counting on this $8,000 to come in,'' Cannon said.
The problem was there was a last-minute glitch with the appraisal for a Federal Housing Administration loan, which is requiring him to renegotiate the mortgage and possibly come up with more cash. "If we lose that," Cannon said of the credit, "it's going to be tough."
Steve Ennis is in the same boat as Dan Cannon. He's 26, works as a quality engineer for EMC Corp. in Franklin, and just got accepted for Northeastern University's prestigious High Tech MBA program. Now living in Westford, he's been negotiating with a bank since April to buy a two-bedroom condo at a new complex in Lowell, through a process called a "short sale" that requires the bank to take a loss on a mortgage the condo's current owners now can't afford. He was struggling to get the bank to decide whether to sell in time for the Wednesday deadline.
"There's nothing on my end that I can do. I've been pre-approved, I've got my down payment waiting,'' Ennis said. "It's just a little frustrating because there's nothing I can do. All I can do is just sit there and wait."
Ennis said losing the tax credit wouldn't cause him to walk away from the deal, but he said, "I was looking at fixing up the place, buying furniture. Eight thousand dollars is a lot of money to have let go based on a deadline that I thought I was going to meet when I put the offer in on the place," back in April.
Around New England, the National Association of Realtors estimates that as many as 8,100 first-time home buyers who've started the process of seeking the credits are at risk of not getting them unless the Senate takes action. (The House on Tuesday afternoon, by a 409-5 vote, approved a measure that would allow people who've met the April 30 binding-purchase deadline to have until September 30, three extra months, to actually complete the transaction and still be able to get the cash.)
Using a methodology that assumes there'd be 25 percent more home-purchase closings in June this year than last, largely because of the incentive of the credit, but that as many as one-third of those transactions may not close by the June 30 deadline, the NAR estimates that the maximum number of people expecting the credit who wind up losing it could be:
New Hampshire: 690
Rhode Island: 500
"They may not be able to close by June 30th, due to circumstances completely out of their control,'' said Angela Harkins, a Realtor in Westford, Mass., who helped Steve Ennis find his Lowell condo. "These buyers have no control over things that are happening in the transactions that are going to jeopardize their tax credit," which may be anything from buyers not getting a local fire department certification of their smoke alarms to a problem with a septic-system approval to a red-tape paperwork delay with a mortgage provider.
Harkins said she fears that many homebuyers will walk away from purchases they planned to make if they can't get the $8,000. "The first-time homebuyers, they really are counting on that money. They've used that in their calculations, and if they don't have that, they might not be able to close at all. So I'm very worried about that.''
Dan Cannon said he thinks it's only fair that, given that Congress created the home-buyer tax incentive in the first place, the Senate now follow the House in providing home buyers relief from the deadline crisis that has largely been created by the existence of the tax credit in the first place.
"Under ordinary circumstances, two months between a contract and closing is pretty typical but where everybody's rushing to try to get in under these deadlines, it's created quite a backlog,'' Cannon said. "The mortgage brokers, the lenders, the closing attorneys, everybody's backed up, and getting the simplest problems resolved is providing to be really difficult -- just to get ahold of anybody.''
Along with as many as 8,100 other New Englanders, Dan Cannon has eight thousand reasons to hope the Senate acts soon.
With videographer Christopher Garvin