Ask RC: Question about foreclosures.
Question: My husband read Biblical Economics and learned much. What is your opinion about giving back our rental/investment property to the bank as a foreclosure?
Not long ago I received another interesting question related to our current economic hardships. A friend wondered if investing in Iraqi currency in anticipation of a steep devaluing of that currency was legitimate. I explained an important but often overlooked element of economics (which also touches on oil speculation and even ticket scalping)- the economic value of sharing risk. If I buy Iraqi denari at x and turn around and sell then at 10x I have not profited illegitimately but have shared in risk that provides genuine economic benefit to the whole Iraqi economy. (Of course I cannot cry if I sell x for a loss either.)
What has that to do with foreclosures? Possibly everything. First let’s cover the easy part. If you agreed, in taking a loan, to pay back that loan, you have an obligation to pay back that loan, whatever might have happened to the value of what you bought with the borrowed money. In this kind of situation that loaning institution is not sharing in the risk. They are simply supplying capitol and you are serving as the risk taker.
But suppose that the language of the loan agreement says something like this- you may either pay back the loan, or you may give the collateral/home back to the lending institution, and lose whatever money you might have put down. In this instance the bank is sharing in the risk of your investment. There is no shame in turning over the keys.
Where it gets fuzzy is when this relationship is not made clear. Consider, for an odd analogy, the game of basketball. Suppose you are a conscientious Christian who desires at all times to abide by the rules. Suppose your team is down just a few points in the waning seconds. The odds say your best bet is to put one of your opponents on the foul line. Do you foul him? Is the foul simply a trade for free-throws, or are the free-throws a punishment for wrong-doing? If the former, certainly you are free to foul. If the latter, even if it costs you the game, you are duty bound not to foul. You cannot do wrong (foul) that good (winning the game) may come.
In these difficult times it is all too tempting to take advantage of systems designed outside a Christian perspective. Bankruptcy is one example. Trading in the keys on an upside down house may be another. At the end of the day, however, the Christian is called, in good times and bad, to let his yay be yay and his nay be nay. If I promised to pay, I pay, even to my own hurt. It is fair, however, to consider what I actually agreed to do. I know many Christians are frustrated in their attempts to talk over their agreements with banks, which won’t begin that process until the Christian first begins to not pay on the loan. Here I would argue we keep our vows to our hurt. We don’t miss payments in order to start a conversation on a short sale or a foreclosure. If they won’t renegotiate as long as we pay, we keep paying.
These matters, in short, are not terribly complicated. We do what we promised to do, and everything will be okay. We need to have faith to believe God sees and honors our integrity.