So by this reasoning, does any loan that has recourse to the collateral, and only the collateral, cease to be usurious and is thus morally unproblematical?

I have in mind here auto loans, as well as ad hoc loans made by pawn shops where collateral is held as security for the loan.  The worst that can happen, you don't pay back the loan, and you lose your collateral.

Think of it this way.

There are (mutuum) loans that are always classified as usurious. Usury is also a grave sin.

And any loan regardless of usury can be immoral.


Yeah losing the collateral (and only the collateral) if you don't pay the loan is part of the intrinsic title. If they get a Deficiency judgment that would be usury.

The point is that if the lender demands more than the collateral then it's usury. It doesn't matter if the collateral is worth less than the loan, the lender only has recourse to the collateral and nothing above that. (Note that damages and other fees can be other extrinsic contracts that aren't usury, i think mountains of piety fell into this category)

My quick looking up of deficiency judgement is that the court forces the borrower to pay up the difference if the collateral doesn't match the debt of the loan.

The point is that if the lender demands more than the collateral then it's usury. It doesn't matter if the collateral is worth less than the loan, the lender only has recourse to the collateral and nothing above that. (Note that damages and other fees can be other extrinsic contracts that aren't usury, i think mountains of piety fell into this category)

My quick looking up of deficiency judgement is that the court forces the borrower to pay up the difference if the collateral doesn't match the debt of the loan.

The fact that what is owed under a mutuum cannot be recovered from reality, but must by definition be recovered from a person, demonstrates that it does not exist in the pertinent sense required to justify rents or profits.

Usury = interest = bad.  The end.

I wouldn't exactly call it "having nothing".  All those months (or years) you paid on the mortgage, you had a place to live, and once you defaulted, you still got up to a year of free rent, you could say.  It's actually pretty rare, or at least it was in my experience, for the representatives of the lender to come along with a moving crew (and perhaps a constable or sheriff), and carry the contents of the house out and put them on the street, with the family being kicked out and put on the street as well.  More common is that the delinquent borrower has long since abandoned the house, sometimes hasn't even opened their mail or has thrown it away (I spent a massive amount of time doing skip tracing, sometimes I felt like a cubicle-rat version of Dog the Bounty Hunter), and the actual seizure of the house is relatively painless.  Lenders end up having to pay for things like winterization and lawn maintenance during the vacancy period out of their own pockets, not to mention taxes and insurance.  They don't want the home to be sold in a tax sale, nor do they want to have the house burn down and be left only with land.  We even had one case where we were able to monitor water usage, and caught the borrower up in a lie when he claimed he hadn't been living there.  I couldn't make up some of these stories if I tried.

As I tell my son, it is the rare 18-year-old who owns a home free and clear, so recognize that, and be thankful for it, or rather, thank your dear grandpa who made it possible.  (And keep your taxes and insurance paid current.)

Those fees could possibly be other extrinsic contacts.