Home buyer tax credit extension approved, but what about Rural Development?
Of course, we’ve been operating under one tax credit for home buyers or another since 2008. The most recent credit gave eligible new buyers up to $8,000 and repeat buyers up to $6,500.
People wanting to take advantage of that credit were instructed to get homes under contract before May 1 and close on them before July 1. According to the National Association of Realtors (NAR), around 180,000 people couldn’t close before July 1 due to a number of delays such as banks having to deal with a slew of applications filed by people who got homes under contract before May 1 and were in a hurry to complete the transactions by the end of June.
The NAR estimated that 2,090 of those buyers sweating the deadline were Arkansans. Congress extended that deadline, but it appears that bank delays aren’t all that was keeping people in Arkansas (and other states) from closing.
A lot of homes sold in Arkansas are financed through mortgages through private banks insured by the U.S. Department of Agriculture’s Rural Development program. That is one of the few “0 down” mortgage products left and it applies to homes sold in rural areas.
Since Arkansas is decidedly rural, the program has been a boon to buyers in most counties in the state. The problem with Rural Development is that it was so popular that it started running out of cash for run guarantees in April. A lot of Arkansans, then, had homes under contract before May 1 but haven’t been able to close for want of Rural Development guarantees.
So, the closing deadline extension will help a lot of people who are dealing with bank delays. However, their may be some problems for people holding out for Rural Development guarantees.
While Rural Development does make some direct loans, most of them are through its guarantee program in which private lenders participate. There have been some efforts to make more money available through the guarantee program, but little progress has been made.
In May, U.S. Senators Blanche Lincoln and Mark Pryor – both Democrats representing Arkansas – said some more money would likely be allocated by the end of the month. The Senate did pass a bill in May to provide that cash, but the legislation has been held up in the House.
According to the NAR, the matter won’t come up again until July 12. If Congress does decide to provide some more Rural Development money in July, those Arkansans wanting tax breaks and hoping to close before Oct. 1 may be in luck.
If it doesn’t pass, however, then the earliest any money could be available through the Rural Development program will be when the next federal fiscal year starts on Oct. 1 – after the extended deadline for people hoping for home buyer tax credits.
Meanwhile, a good number of Arkansans – whether they’re after home buyer tax credits or not – are waiting to see what happens with the Rural Development program. A lot of real estate agents and bankers are waiting, too.
This column is the last installment in the Arkansas Realtors Association “House to House” series that will appear here. Seriously.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.