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Extension of tax credit and flood insurance program finally signed…

The mortgage industry can feel a little more patriotic this 4th of July holiday now that President Obama has signed two bills to re-start the flood insurance program and extend the closing deadline for homebuyers seeking a tax credit.

The National Flood Insurance Program has been shut down for the past month (as it had expired earlier in the year and congress had not managed to get an extension through yet), which has tied up mortgage closings in many flood-prone areas. The bill – H.R. 5569 –¬†President Barrack Obama signed authorizes FEMA to approve new flood insurance policies through September 30. It also allows FEMA to approve flood insurance applications and renewals that have been pending since the June 1 shutdown.

The second bill – H.R. 5623 –¬†extends the closing deadline for the homebuyer’s tax credit program by three months to September 30. Originally, homebuyers who signed a sales contract by April 30 had until June 30 to close and qualify for the tax credit. But a tax credit-driven jump in home sales caused closing delays. The National Association of Realtors warned that up to 180,000 buyers could miss the deadline and lose their tax credit — $8,500 for first time homebuyers and $6,500 for repeat buyers. Real Estate agents noted that changes in mortgage settlement rules and lapses in the flood insurance program and Rural Housing Service single-family loan program contributed to closing delays.

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