Mortgage Companies are Protecting Themselves from December 1, 2009 Closings

I am seeing disclosures from wholesale lenders advising that they will not be held responsible for transactions that do not close in time for the first time home buyers tax credit which is currently set to expire on November 30, 2009.   Here’s an example from a memo I received this morning from one of the lenders we work with:

Currently, the American Recovery and Reinvestment Act of 2009 authorizes a tax credit of up to $8,000 for qualified first-time home buyers purchasing a principal residence on or after January 1, 2009 and before December 1, 2009.  For purposes of the tax credit, the purchase date is the date when closing occurs and the title to the property transfers to the home owner.

“Wholesale Bank” is providing this notice to our Correspondents and Brokers that “Wholesale Bank” cannot guarantee that the mortgage closing will take place prior to December 1, 2009 and therefore it is possible that your Borrower(s) will not qualify for the first-time homebuyers tax credit because of the date of purchase deadline.

“Wholesale Bank” strongly recommends that you use the attached form, or any similar from that includes this information to inform your Borrower(s) of the tax credit guideline…

In anticipation of the deadline nearing and the recent increase in loan volume, please plan ahead and get your loans in underwriting, closing and funding in ample time to meet the above deadline.

“Wholesale Bank” will not be responsible or liable for the purchase of the home failing to meet the deadline requirements of the first-time home buyer’s tax credit program.

Mortgage Master has adopted a similar disclosure which is being provided on our purchase transactions. 

As I’ve mentioned several times here at Mortgage Porter, if you’re counting on receiving the $8,000 First Time Homebuyer Tax Credit, and if you’re buying a home in the Seattle/King County area, please try to close no later than mid-November due to the holidays and county closures due to the furlough dates (and the increased volumes of transactions). 

Don’t risk closing the day after November 30, 2009.