The word “deadline” started out meaning exactly what it says — a line no prisoner could cross and expect to remain alive in Civil War prisons.
The deadline for first-time homebuyers isn’t quite as direct; life goes on without an $8,000 tax credit. But as the sun sets on that tax credit today, some buyers are feeling a metaphorical gun pointed at their backs.
“We’re hoping maybe for a miracle,” said John Landon, an Everett renter trying to buy a house in Marysville.
The last weeks have been a frantic rush of paperwork, e-mail and phone calls for many buyers and their agents, up against a firm April 30 deadline for an accepted offer — a deadline that changes the affordability of a first home for many.
The deals have to close by June 30 in order for buyers to cash in on the tax credit.
Some buyers are up against a process that wasn’t designed to be quick. Others are fighting unexpected problems with bank-owned properties or an otherwise volatile real estate market.
The program has led to a stronger-than-expected spring selling season; nearly 1.8 million households had used the credit as of mid-February. That’s a cost of $12.6 billion, according to the Internal Revenue Service.
But it’s still unclear if that surge will carry over into the summer.
This is the second incarnation of the tax credit, a federal attempt to resurrect the collapsed housing market that’s long been a fatal stumbling block for the U.S. economy.
But with no indication from lawmakers about whether there’s another extension on the horizon, some are getting ready to cut their losses.
Buying bank-owned
Landon and his wife celebrated April 15. It was his birthday, and the couple’s offer on a single-family home in Marysville had just been accepted by City Bank, the financial institution holding the deed to the property after a foreclosure.
After a long and frustrating search, the Everett couple and first-time buyers thought they’d found their home.
“It was everything we were looking for,” Landon said.
But two days later, the headline scrawled across the morning newspaper indicated their troubles weren’t over: “Lynnwood-based City Bank seized, then swiftly sold.”
In the days that followed, it became clear that this made things more complicated for the Landons, who were also receiving financing through now-defunct City Bank.
Suddenly, everything changed.
Oak Harbor-based Whidbey Island Bank bought City Bank after it was seized by regulators, a last-resort step after more than a year of losses related to bad real estate loans.
City Bank’s depositors were immediately Whidbey Island Bank customers. For those trying to buy foreclosure properties, the transition wasn’t seamless — far from it.
The Federal Deposit Insurance Commission assumed City Bank’s less-desirable assets, the tattered remnants of a failed loan portfolio that Whidbey Island Bank wasn’t willing to take on in the deal.
Loan officers were let go from Whidbey Island Bank, according to real estate agents familiar with the transaction. The FDIC started the arduous process of sorting through half-way completed deals.
A holding company was hired to review and reapprove the deals: Prescient Asset Management. Company representatives did not return calls seeking comment on the process.
Landon is hoping the deal will be accepted again, but isn’t expecting to make today’s deadline.
“Now it’s just a waiting game,” he said. “I’m assuming that the tax credit is out the window. That’s fine. I can live with it.”
When things go right
Nicole Mercer didn’t think she’d be in time for the tax credit either. She started looking for a house Monday, the start of a whirlwind tour of 16 prospective homes.
She found the one after two days of looking: a house in Silver Lake that’s move-in ready.
With an offer accepted and an inspection pending, Mercer expects to close well-before the June 30 deadline.
“The prices have dropped so drastically, I was able to afford a home now,” she said. “I never thought I would be able to with a single income household.”
Agent Michelle Macris with John L. Scott’s Everett office worked with Mercer during her search.
She’s been working long hours for about a month trying to get as many deals accepted as possible before the deadline.
But Macris is surprised by how many buyers share Mercer’s mind-set about finding a house that’s exactly right, even if that means missing the tax break.
“That tells me that maybe there’s some hope for after this tax credit,” she said. “I think it’s encouraging.”
But she adds: “I’m still not sold on whether this craze is going to continue.”
This report contains information from the Associated Press. Read Amy Rolph’s small-business blog at www.heraldnet.com/TheStorefront. Contact her at 425-339-3029 or arolph@heraldnet.com.
One more day
First-time homebuyers whose offers are accepted today will receive the $8,000 federal tax credit next year. The deal must close by June 30.
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