Are We Going To See an Extension and Expansion of the Tax Credit?

NAR seems to be doing everything possible to influence Congress to extend the tax credit and even expand it to other buyers. NAR recently sent First Vice President Ron Phipps to Capitol Hill in order to give testimony on why they need to extend the tax credit and open it up to other homebuyers besides first-time homebuyers.

I have spoken with many REALTORS from across the state of Missouri and many feel that they have seen increased sales due to the tax credit. I believe that it is a great idea but we have not seen much of an increase in purchases due to the tax credit. Actually, I would have to say that many lenders are trying to convince buyers not to use the tax credit and a couple have even gone as far as to say they won't do it. I should clarify what I mean. Missouri has the TCAL program which allows buyers to use their tax credit immediately in order have money for a down payment or closing costs. What lenders do not seem to like it that the state of Missouri has contracted with US Bank to back these "loans" for the buyers.

Here is how it works: US Bank basically makes a 2nd loan for the buyer and lends them the money which becomes their down payment or closings costs. This "2nd loan" is then carried with no interest and no payments until June 2010. If the buyer does not repay the 2nd loan by then with the tax credit money from the government, interest begins to accrue on the 2nd loan and payments become due.

It is a great idea for homebuyers but apparently the process that the "original" lender has to go through in order to get this done for the buyer is tough and everyone is at the mercy of US Bank. I can see how US Bank wants to protect themselves but the real estate transaction is tough enough without adding a whole other moving part to the equation.

Overall, I would have to say that the plan is working and many people are benefiting. I am still yet to work with someone who uses the tax credit up front but many have bought properties i have listed and the process was gruelling. I do appreciate everything NAR is doing and I feel that I am getting my moneies worth!