A Foreclosure Fee For Banks

This may be old news, but California Assembly member Bob Blumenfield introduced legislation that imposes a $20,000 fee on banks when they foreclose on a home. The logic is pretty simple. First, many of the costs of foreclosures are “paid for” by community members and local governments. For local governments, empty foreclosed homes require additional police. Neighbors eventually must pay for this additional service, but they also pay in the form of reduced home prices. Banks are not taking account of these costs when they are foreclosing homes. The $20,000 fee forces banks to account for the true cost of their actions, both to themselves and to the community. This reduces the incentive to foreclose, which increases the incentive for banks to negotiate with homeowners. I don't know if the measure will pass, but I like the logic. 

Here, Mike Konzcal of the Roosevelt Institute outlines the reasons why this additional fee would likely not be passed on to homeowners.