The Senate this week voted 60 to 37 to extend the date by which you have to close on your home to qualify for the home buyer tax credit. The new date is September 30.

Sen. Harry Reid (D-Nev) noted that approximately 180,000 home buyers had signed valid contracts by April 30. However, they will not be able to close by June 30 due to outside forces.

Basically, the banks, appraisers, and title companies are overwhelmed by the crush of demand from home buyers and can’t keep up.

The new rules of mortgage finance require lenders to double and triple-check documents, verify all information, and pull several credit checks. Verifying income, tax returns, bank accounts and assets can be time-consuming.

Meanwhile, appraisers are now booked weeks in advance in some communities, making it difficult to meet the June 30 deadline. And, many title companies who had laid off workers after the real estate bubble burst, simply don’t have enough time in the next two weeks to schedule all of the closings.

But another group of buyers who are running short of time are those who are hoping to buy short sales, homes that are worth less than the mortgage amount.

One Realtor left a post on my blog saying that she had three buyers who made bids on short sale properties in January and February and had yet to receive a response from the lenders.

These contracts all contain contingencies that allow the buyers to cancel the deals, penalty-free, if for some reason they do not qualify for the home buyer tax credits.

Despite the Obama Administration upping the fee paid to lenders who approve a short sale, approval for these deals is still taking months. One mortgage banker speculated that writing off the loss on these loans wasn’t particularly appealing, even though taking back the property as a foreclosure would generally net the lender less money.

Extending the deadline by which those with signed, valid contracts can close and still collect the $8,000 first-time home buyer tax credit and $6,500 long-term homeowner tax credit is bound to confuse home buyers.

All they’ll hear is that the home buyer tax credit deadline has been extended, not realizing that they must actually have had a valid contract that was executed by this past April 30th .

But perhaps this is what the Realtors, Mortgage Bankers, and others associated with the real estate industry is hoping for – a little confusion and a few more sales.

Home buyer demand has plummeted an astounding 40 percent since the end of April, more than most industry observers expected – all the while mortgage interest rates have dropped to a new 50-year record low of 4.6 percent for a 30-year fixed rate loan.

Indeed, lenders nationwide are offering 30-year fixed-rate mortgage interest rates as low as 4.58 percent, and as low as 4.42 percent in Colorado, according to Zillow’s Mortgage Rate Ticker. Zillow reports that the rate for a 15-year fixed rate loan is currently 4.03 percent.

But apparently super-low interest rates aren’t enough to overcome steadfastly high unemployment, a nervous Europe and a very modest U.S. recovery.

Still, for 180,000 buyers who would otherwise have seen their tax credits slip away, this week’s Senate action is good news.