Saturday, April 12, 2008

If I Can't Have It, Nobody Can!

That seems to be the sentiment behind the rash of home defacement being carried out by homeowners facing foreclosure. In two recent online articles, the Wall Street Journal reported that a surprisingly large portion of those entering foreclosure are finding illegal and creative ways to fight the bank. Some homeowners have stopped paying their mortgage and are essentially squatting in their own homes. Others have taken the more destructive route, smashing holes in walls, removing wiring and plumbing, throwing paint on the carpets, and even leaving their pets behind to further soil the home.

So their attitude is that of revenge, they clearly blame the bank for their misfortune. But is their malice aimed in the right direction? We can see that many lending institutions did something unethical; offering a service that was bound to harm the buyer, sooner or later. They took advantage of a booming economy and an unsuspecting populace. But before we break out the torches and pitchforks, we need to hold up the mirror. After all, it was the homeowners who accepted the sub-prime loans in the first place, buying homes (with pipedreams of wealth and security) that they really couldn't afford from lending establishments who suckered them into bad deals and then sold their mortgage to others. The homeowners took advantage of a deal that was too good to be true. The truth is that both parties did wrong. Both were hoping to take advantage and get something out of the deal.

A third party, the banks, also bought the mortgages hoping that they would be worth something, but are now finding out that many mortgages are worthless. The homes they must foreclose on are often half-destroyed, fought over in court, or cannot be sold in the present market. The banks are being left to pay for other people's sin. The situation has progressed to the point that many banks have begun offering up to thousands of dollars for homeowners to leave their foreclosed-upon houses in good condition. This practice could certainly be seen as an "investment" on the part of the banks, but it is similar, in a way, to negotiating with terrorists. They have no guarantees, and are only trying to recoup as much from their losses as possible, knowing they will not profit from the situation. This is pretty poor business.

We are seeing the shrinking of the middle-class. We just didn't know how far the shrinkage had already progressed. Just as so many corporations hid their debts and overstated their earnings to appear more solvent than they were and boost investments in the nineties, so homeowners took the same tack. They bought homes and cars they could not afford and now have their foolishness exposed to the world. Many of the haves have been revealed to be have-nots.

While the Bible does not speak to this present situation directly, it certainly has indirect implications. When the Israelite people entered the land of Canaan, they did so as tribes. They settled the land as such and were given rules concerning property ownership in the Law of Moses. The year of Jubilee (cf. Lev. 25:10-17) occurred every fifty years and was the year that slaves were set free, debts forgiven (slaves and debts were to be forgiven every seven years, but the Year of Jubilee trumped that as well.), and property was returned to the family, clan, and tribe that it first belonged to, regardless of how long it had been owned by the new owner, so that it would remain an inheritance for that tribe for as long as the nation endured.

Deuteronomy also speaks of cancelling debts. Deut. 15:1-2, "At the end of every seven years you must cancel debts. This is how it is to be done: Every creditor shall cancel the loan he has made to his fellow Israelite. He shall not require payment from his fellow Israelite or brother, because the LORD's time for canceling debts has been proclaimed." A few verses later, it also speaks of how the Israelites were to treat their poorer brethren. "If there is a poor man among your brothers, . . . do not be hardhearted or tightfisted toward your poor brother. Rather be openhanded and freely lend him whatever he needs . . . There will always be poor people in the land. Therefore I command you to be openhanded toward your brothers and toward the poor and needy in your land." (15:7-11) Further, Jesus said in Matthew 5:42, "Give to those who ask from you, and do not turn away from the one who wants to borrow from you."

We need to be careful in our use of these verses because those in the Law were tied to blessings and were specifically for national Israel. Yet both because Jesus picks up the same themes and because there is an underlying principle of compassion and right human action that God set up, we should find ways to practice something similar in business. If our culture did not pursue money with greed and envy, seeking to build themselves up and boast, but rather gave of what they had to one another, we would have a decidedly different America. The financial and business models that we have put in place are not working. They are based too much on selfish gain and not enough on building up our brothers, communities, nation, and world.

I should clarify, here, that I am not a socialist, at least not as socialism has evidenced itself so far. Rather, I believe in a capitalism that is not regulated by only "the market," but by ethical and moral considerations for the rest of humanity. I think it is right for people to make a profit. I think it is good that some are rich. I think that money is a very good thing. But the love of money (over one's neighbor) is the root of all sorts of evil. The poor are definitely not exempt from this sin.

How does this apply to foreclosures? First, people should do their homework and pass on houses they can't afford (as my wife and I did on a seemingly great deal this last year). Second, people should not take out "creative" loans ("creative" generally spells "financially unfeasible"). Third, people should stop making "image" what they are about. Rather, do what is right for your family and your community. Fourth, don't put yourself in a position where you have to turn to disreputable/fly-by-night lenders, who will be quickly put out of business if my advice were followed. Fifth, if you do find yourself, despite your best efforts, in foreclosure, do the right thing by putting time into the house. Fix it up as if you were selling it, you were only renting it anyway (the lender/bank really owned it the whole time). Make the house a blessing to the bank and to the next buyer. Tell the bank you are going to do the work, as they may allow you to stay longer or pay you for the repairs. You may be out of a house, but your reward will be great.

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