Foreclosures are bad. They're bad for neighborhoods. They're bad for local governments hungry for property taxes. They're bad for home builders forced to slash prices.
So wouldn't you know it? The government, in the form of the Florida Legislature and the Federal Housing Administration, decided to make foreclosures worse.
In an exhibition of the law of unintended consequences, the Legislature determined the $295 filing fee charged banks to initiate foreclosures was too low. As of June 1, the fees range from $395 to $1,900.
The fee changes make perfect sense. Foreclosures have overwhelmed local courts in the tens of thousands. Court hearings should pay for themselves as much as possible.
Ah, but for the unintended consequences! Late last month, just before the law took effect, foreclosures filed in Pinellas County jumped by an order of four. In the first half of May, new foreclosure cases numbered about 400. In the second half of May, they surged to 1,600.
Looks like banks wanted to get in under the wire while the fees were still cheap.
Here's why this fee change could accelerate foreclosures: By filing en masse in May, banks injected an overdose of new properties into a market already buzzing with too many homes.
Filing fees also rose for homeowners who contest their foreclosures. Wary of spending hundreds of dollars, fewer will probably take on the banks. Result: more home repossessions.
Not to be outdone, the federal government decided to mess with the $8,000 first-time home buyer tax credit. The FHA is giving Americans the option of taking a cash advance. You won't have to wait to file an income tax return after Jan. 1.
Home buyers can't use the money for a down payment, but they can pay off closing costs. Money being fungible, it's much the same thing.
You needn't owe federal income taxes to qualify for the $8,000. In other words, it's not a refund, but a gift from your fellow taxpayers. Put less charitably, it's a welfare payment enlisted to the cause of salvaging the housing market.
FHA-backed loans are designed to help people who otherwise can't afford a home. The government asks homeowners for only a 3.5 percent down payment.
With the cash advance, Washington is encouraging the same risky behavior that caused the housing collapse. Home prices could fall 10 percent more, wiping out those 3.5 percent down payments and erasing the equity that binds a homeowner to the property.
The actions of the government are well intentioned. If we're lucky, home values will stabilize and foreclosures will recede as a threat.
But to paraphrase the Hippocratic oath for physicians: Save the shingles without caving in the roof.
James Thorner can be reached at email@example.com or (813) 226-3313. Read his blog at blogs.tampabay.com/realestate.