In this issue

Jonathan Tobin: Defending the Right to a Jewish State

Heather Hale: Compliment your kids without giving them big heads

Megan Shauri: 10 ways you are ruining your own happiness

Carolyn Bigda: 8 Best Dividend Stocks for 2015

Kiplinger's Personal Finance editors: 7 Things You Didn't Know About Paying Off Student Loans

Samantha Olson: The Crucial Mistake 55% Of Parents Are Making At Their Baby's Bedtime

Densie Well, Ph.D., R.D. Open your eyes to yellow vegetables

The Kosher Gourmet by Megan Gordon With its colorful cache of purples and oranges and reds, COLLARD GREEN SLAW is a marvelous mood booster --- not to mention just downright delish
April 18, 2014

Rabbi Yonason Goldson: Clarifying one of the greatest philosophical conundrums in theology

Caroline B. Glick: The disappearance of US will

Megan Wallgren: 10 things I've learned from my teenagers

Lizette Borreli: Green Tea Boosts Brain Power, May Help Treat Dementia

John Ericson: Trying hard to be 'positive' but never succeeding? Blame Your Brain

The Kosher Gourmet by Julie Rothman Almondy, flourless torta del re (Italian king's cake), has royal roots, is simple to make, . . . but devour it because it's simply delicious

April 14, 2014

Rabbi Dr Naftali Brawer: Passover frees us from the tyranny of time

Greg Crosby: Passing Over Religion

Eric Schulzke: First degree: How America really recovered from a murder epidemic

Georgia Lee: When love is not enough: Teaching your kids about the realities of adult relationships

Cameron Huddleston: Freebies for Your Lawn and Garden

Gordon Pape: How you can tell if your financial adviser is setting you up for potential ruin

Dana Dovey: Up to 500,000 people die each year from hepatitis C-related liver disease. New Treatment Has Over 90% Success Rate

Justin Caba: Eating Watermelon Can Help Control High Blood Pressure

The Kosher Gourmet by Joshua E. London and Lou Marmon Don't dare pass over these Pesach picks for Manischewitz!

April 11, 2014

Rabbi Hillel Goldberg: Silence is much more than golden

Caroline B. Glick: Forgetting freedom at Passover

Susan Swann: How to value a child for who he is, not just what he does

Cameron Huddleston: 7 Financial Tasks You Should Tackle Right Now

Sandra Block and Lisa Gerstner: How to Profit From Your Passion

Susan Scutti: A Simple Blood Test Might Soon Diagnose Cancer

Chris Weller: Have A Slow Metabolism? Let Science Speed It Up For You

The Kosher Gourmet by Diane Rossen Worthington Whitefish Terrine: A French take on gefilte fish

April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review January 7, 2008 / 29 Teves 5768

Predatory Lending

By Rabbi Dr. Asher Meir

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Mortgage lenders are entitled to protection from sudden foreclosure

http://www.JewishWorldReview.com | Q: I've heard the great sub-prime crisis was caused by predatory lending practices. Is it wrong for banks to lend to high credit-risk homebuyers?

A: The so-called "subprime crisis" resulted when many mortgage defaults occurred within a short time. The borrowers on these mortgages were individuals with bad credit risks. Historically such individuals could not easily obtain mortgages, but a combination of new financial instruments (mortgage securities) and a rising housing market gave banks the confidence to lend to such people.

I certainly don't think it was unethical of the banks to extend credit to these individuals. One of the main criticisms of banks in the past has been that they deny credit to people who really need it. The saying was that the only people who can get loans are the people who don't need them. In Jewish tradition it is a special mitzvah to lend to needy individuals (without interest). In fact the verse which commands us to provide for the needy individual "enough for whatever he lacks" (Deuteronomy 15:8) specifically refers to lending money, not giving charity.

Some accusations have been made that the banks gave credit on terms that were likely to lead to default and repossession. I can't comment on these accusations, and I have seen no convincing evidence so far. But it is worthwhile to see how Jewish tradition deals with the ethical dilemma involved in the decision to extend credit when there is a good chance that it will result in repossession.

The Mishna states:

One who lent money against [the collateral of] his field, and said to him: "If you don't pay me within three years, it becomes mine", it becomes his. (1)

The commentators understand that this refers even to the case where the field is worth less than the loan. In this case, the lender has an interest in default, enabling him to take possession of the valuable field. Perhaps he would like to tempt the borrower into taking the loan! Yet from the mishna it seems that there is no problem lending money when foreclosure (seizure) is an evident consideration in the eye of the lender, and not merely a last resort in case of default.

However, the subsequent discussion in the Talmud concludes that at least in the case where the field is worth more than the loan, such an agreement is an "asmachta". Asmachta is a legal expression meaning that a person doesn't have true "informed consent" to an agreement, because he doesn't properly understand the risks involved. For example, a hustler's gambling winnings may be considered asmachta. (2)

So such a deal is void, unless it is originally drawn up in a way which draws attention to the risks involved.

Another type of protection provided by Jewish law is the right of redemption. Even after the property has been repossessed, the borrower has the right to buy it back if he obtains the money. (Such a right exists in many jurisdictions today as well.) The Talmud teaches:

The scholars of [the city of] Nahardaa said: An assessment can be reversed up to twelve months. But Ameimar said, I am from Nahardaa and I say an assessment can be reversed indefinitely. And the law is, an assessment is reversible indefinitely because of "Do the right and good" (Deuteronomy 6:18).

The power of redemption is originally conceived not as a right of the borrower, but rather as an ethical obligation of the repossessor. One result in defining the law this way is that there are certain equitable exceptions to the law. After all, it doesn't make sense to compel the "right and the good" of the borrower at the expense of the right and the good of the lender.

To sum up: I have seen no evidence that sub-prime lenders were in any way scheming to foreclose. However, the whole crisis has brought public attention to the foreclosure process and possible inequities in it. Jewish law includes a number of safeguards against predatory lending practices, including a demand for truly informed consent to lopsided foreclosure conditions, and a right of redemption for someone who has lost his house.

SOURCES: (1) Babylonian Talmud, Bava Metzia 65b (2) Babylonian Talmud, Sanhedrin 24b (3) Babylonian Talmud, Bava Metzia 35a


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JWR contributor Rabbi Dr. Asher Meir, formerly of the Council of Economic Advisers in the Reagan administration, is Research Director of the Business Ethics Center of Jerusalem, Jerusalem College of Technology. To comment or pose a question, please click here.


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