Catholic Info
Traditional Catholic Faith => Anσnymσus Posts Allowed => Topic started by: Änσnymσus on April 19, 2023, 08:14:01 AM
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What is the proper Catholic understanding of Usury? I know the modernist definition has 'good' and 'bad' usury. From what I understand, the proper definition is that Usury is *any* interest on a loan. Is this correct?
Is the term 'loan' the key factor here? If someone made money with 'interest' but not from a loan is it usury? Example. Eth staking to provide network security? Or any sort of crypto 'staking' that relies on network/user fees to pay the 'interest' (reward? payment for security?).
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My understanding is that usury is the ability to make money solely off of (sterile) money. No labor or risk involved in the loan or investment. So any interest on loans would be usurious.
An investor who would reap a profit from risk-taking would be in the clear.
Vll tried to "white-wash" the sin by stating that is is only unreasonably high interest that is wrong, but it is really ALL interest that is the sin, and a big one. Obviously it is the person gaining from usury and not the victim that is the sinner.
Loans made with reasonable fees and without interest are ideal.
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My understanding is that usury is the ability to make money solely off of (sterile) money. No labor or risk involved in the loan or investment. So any interest on loans would be usurious.
An investor who would reap a profit from risk-taking would be in the clear.
Vll tried to "white-wash" the sin by stating that is is only unreasonably high interest that is wrong, but it is really ALL interest that is the sin, and a big one. Obviously it is the person gaining from usury and not the victim that is the sinner.
Loans made with reasonable fees and without interest are ideal.
Alright thanks. I think the key here is understanding the terms 'sterile' and 'loan' because there are a lot of things in the modern world that make 'interest' that might not be 'sterile' or a 'loan'. But due to the gravity of usury I am trying to get a 100% scope of the meaning.
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Alright thanks. I think the key here is understanding the terms 'sterile' and 'loan' because there are a lot of things in the modern world that make 'interest' that might not be 'sterile' or a 'loan'. But due to the gravity of usury I am trying to get a 100% scope of the meaning.
"Interest" per se is always "sterile". There are really only three possible justifications.
1) If an individual lends the money out, he's losing out on the use of the money that he could otherwise use for other enterprises that could make him more money.
2) Lender incurs risk.
3) Lender loses money he could make by collecting interest on it himself.
4) Lender incurs some inconvenience. So, for instances, banks have to put work into processing loans, managing payments, etc.
#3 is circular and falls on those grounds.
#4 would be compensated for by fees, as the amount of work involved is not proportionate to the amount of money loaned.
#2 is a situation where the lender's risk does increase with the amount of the loan.
#1 is the same. I could for instance start a business with my money.
So #1 and #2 are the only possible justifications for collecting fees that are proportionate to the amount of money loaned.
For #1, if I want to start some business with the money, then I simply wouldn't loan it out in the first place. This doesn't justify turning the mere lending of money into your "business".
For #2, the way to handle it would be to have the lendee pay lending "insurance" ... this would be based on actuarial tables based not only on default rates but also the assessment of a given individual's risk of default (perhaps a credit score and other criteria). If the loan were secured, however, there's no risk, well, that's basically what a "secured" loan is. But there could be some risk depending on whether the asset could depreciate to below what was owed.
This way the fees and insurance are based on the realities mentioned above, with a reasonable profit margin as you would have in any other business to compensate your time, effort. If I run a loan company, I should be able to draw a reasonable salary for the work I put in to run the company. But any "profits" above and beyond that definitely fall under the aspect of "usury".
When a Jew provides you with a mortgage, not only does the Jew secure his investment with the collateral of the home (and homes tend to appreciate) AND charge you thousands in "closing fees" and sometimes even make you pay for "mortgage insurance" (generally if you have < 20% equity in the home), but they ALSO make inordinate amounts of money in excess of the home's value. If you take out a mortgage on a $250,000 home, you'd end up paying about $750,000 by the end of 30 years. That is gravely sinful usury. They should be making their salaries from the fees
So a non-usurous home "loan" would entail a few hundred dollars worth of closing costs and fees, a monthly servicing fee (probably no more than $50 per month, since it's nearly all electronic and automated), and a certain amount of mortgage insurance (probably no more than $200, depending on your credit "risk"), along with principle payments. If the home needed to be foreclosed upon, the home should be sold for market value, and the bank should have only as much stake in the property as would cover the amount of remaining principle, while the mortgagee would receive as much of the principal he paid into it, minus any fees/costs associated with the foreclosure itself.
Similar would apply to any secured loan, like a car loan.
Credit Card issuers would be compensated by merchant fees (not based on a percentage, however, as the work incurred does not increase with the amount charged. Credit Card users would pay a reasonable monthly fee to make up for the cost of servicing the account and the people that needed to be employed to do it, as well as a reasonable insurance amount proportionate to the balance and the credit worthiness of the individual.
None of these "companies" should be making millions of dollars in "profits" based off of "interest".
Similar rules should apply to all enterprises, where people should draw salaries proportionate to their contribution to the company, and possible also some additional money for R&D, to develop additional products or improve their current ones, have some cushion for times of economic downturn, etc. But the millions of dollars of profits are simply unjust. NOBODY is worth millions of dollars per year while people who do the actual work that brings in the money are making non-living wages.
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I think you might be interested in the book “Barren Metal” by E. Michael Jones
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"Interest" per se is always "sterile". There are really only three possible justifications.
1) If an individual lends the money out, he's losing out on the use of the money that he could otherwise use for other enterprises that could make him more money.
2) Lender incurs risk.
3) Lender loses money he could make by collecting interest on it himself.
4) Lender incurs some inconvenience. So, for instances, banks have to put work into processing loans, managing payments, etc.
#3 is circular and falls on those grounds.
#4 would be compensated for by fees, as the amount of work involved is not proportionate to the amount of money loaned.
#2 is a situation where the lender's risk does increase with the amount of the loan.
#1 is the same. I could for instance start a business with my money.
So #1 and #2 are the only possible justifications for collecting fees that are proportionate to the amount of money loaned.
For #1, if I want to start some business with the money, then I simply wouldn't loan it out in the first place. This doesn't justify turning the mere lending of money into your "business".
For #2, the way to handle it would be to have the lendee pay lending "insurance" ... this would be based on actuarial tables based not only on default rates but also the assessment of a given individual's risk of default (perhaps a credit score and other criteria). If the loan were secured, however, there's no risk, well, that's basically what a "secured" loan is. But there could be some risk depending on whether the asset could depreciate to below what was owed.
This way the fees and insurance are based on the realities mentioned above, with a reasonable profit margin as you would have in any other business to compensate your time, effort. If I run a loan company, I should be able to draw a reasonable salary for the work I put in to run the company. But any "profits" above and beyond that definitely fall under the aspect of "usury".
When a Jєω provides you with a mortgage, not only does the Jєω secure his investment with the collateral of the home (and homes tend to appreciate) AND charge you thousands in "closing fees" and sometimes even make you pay for "mortgage insurance" (generally if you have < 20% equity in the home), but they ALSO make inordinate amounts of money in excess of the home's value. If you take out a mortgage on a $250,000 home, you'd end up paying about $750,000 by the end of 30 years. That is gravely sinful usury. They should be making their salaries from the fees
So a non-usurous home "loan" would entail a few hundred dollars worth of closing costs and fees, a monthly servicing fee (probably no more than $50 per month, since it's nearly all electronic and automated), and a certain amount of mortgage insurance (probably no more than $200, depending on your credit "risk"), along with principle payments. If the home needed to be foreclosed upon, the home should be sold for market value, and the bank should have only as much stake in the property as would cover the amount of remaining principle, while the mortgagee would receive as much of the principal he paid into it, minus any fees/costs associated with the foreclosure itself.
Similar would apply to any secured loan, like a car loan.
Credit Card issuers would be compensated by merchant fees (not based on a percentage, however, as the work incurred does not increase with the amount charged. Credit Card users would pay a reasonable monthly fee to make up for the cost of servicing the account and the people that needed to be employed to do it, as well as a reasonable insurance amount proportionate to the balance and the credit worthiness of the individual.
None of these "companies" should be making millions of dollars in "profits" based off of "interest".
Similar rules should apply to all enterprises, where people should draw salaries proportionate to their contribution to the company, and possible also some additional money for R&D, to develop additional products or improve their current ones, have some cushion for times of economic downturn, etc. But the millions of dollars of profits are simply unjust. NOBODY is worth millions of dollars per year while people who do the actual work that brings in the money are making non-living wages.
Thanks for the answer. I haven't done this type of usury so I'm in the clear. Though I am concerned specifically with staking certain cryptocurrencies.
E.g if i stake etherium to help secure the network and get interest that way. From what i understand the interest comes from network fees. I don't think it is usury but it would be foolish of me to assume so without consulting counsel.
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This may be helpful.
https://novusordowatch.org/st-alphonsus-liguori-moral-theology-usury/
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This may be helpful.
https://novusordowatch.org/st-alphonsus-liguori-moral-theology-usury/
Thanks but it doesn't address my particular matter. I guess it will depend on whether or not staking eth or whatever token on a node through a smart contract counts as a 'loan' or not.
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2) Lender incurs risk.
So #1 and #2 are the only possible justifications for collecting fees that are proportionate to the amount of money loaned.
For #2, the way to handle it would be to have the lendee pay lending "insurance" ... this would be based on actuarial tables based not only on default rates but also the assessment of a given individual's risk of default (perhaps a credit score and other criteria). If the loan were secured, however, there's no risk, well, that's basically what a "secured" loan is. But there could be some risk depending on whether the asset could depreciate to below what was owed.
For, that is the real meaning of usury: when, from its use, a thing which produces nothing is applied to the acquiring of gain and profit without any work, any expense or any risk.
From the fifth lateran council. Not sure what "risk" means here, since even lenders take 'risk' when giving out their money (i.e someone could run away with it...)
Also also "a thing which produces nothing", OP does staking ETH produce anything? Does network security count as 'produce'?
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Money used as "capital", e.g., company stock (which is a sort of loan) or a business loan, is not typically usury.
That's to say, if the money is somehow employed to produce "more", it is not usury.
...From Trent.
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Money used as "capital", e.g., company stock (which is a sort of loan) or a business loan, is not typically usury.
That's to say, if the money is somehow employed to produce "more", it is not usury.
...From Trent.
Most stock trading, however, is akin to usury. It would be one thing to invest and receive dividends, but trading in stocks and commodities when you made no actual contribution to the value of the product other than riding the price fluctuations would be akin to usury.
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From the fifth lateran council. Not sure what "risk" means here, since even lenders take 'risk' when giving out their money (i.e someone could run away with it...)
Also also "a thing which produces nothing", OP does staking ETH produce anything? Does network security count as 'produce'?
That's precisely what risk means, that you could end up losing your money, whether the borrower would steal it or whether he would invest it badly and lose it that way. That's where I proposed that some kind of borrower's insurance would be the appropriate structure to mitigate that risk.
Some combination of fees to compensate for the servicing of the loan and borrower's insurance in case of default) makes the most sense for "loan" operations, and the companies that service loans would make money for the services they provide in that regard (from the fees). But when the bank gets "money" from the fed, say, for a mortgage loan, and then charges 2-3 times the value of the actual home over the course of the loan, for doing next to nothing, that's gross usury. So these Jew bankers who didn't lift a single finger to cut down a tree or hammer in a nail to build the home, they feel entitled to twice as much money as the people who labored to build the home? It's really disgusting.
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Most stock trading, however, is akin to usury. It would be one thing to invest and receive dividends, but trading in stocks and commodities when you made no actual contribution to the value of the product other than riding the price fluctuations would be akin to usury.
OP here, what you said about riding price fluctuations, I thought that would be 'speculation'?
Also with my crypto staking issue. Technically I receive network/user fees (though this is currently subsidised by the dev team's wallet), I feel this is closer to dividends than usury, though more 'useful' than a dividend since my 'money' (tokens) contribute to network security. I know usury is a grave sin so I want to be 100% sure on this issue.
(note that i am only using ETH as an example because it is similar to my coin but I don't want to be 'shilling' here)
Some traditional priests I've spoken to define usury as, "taking excessive interest on a loan". Though I have seen some people say the Church used to teach that it was "taking any profit on a loan" but was later changed due to modernism.
I agree with what you said about jews making stupid amounts of money by doing "nothing".
Also if I were to sell my investment (I originally never planned to sell as I just wanted passive income) would that be a sin? My investment has changed technologically speaking, and is a better product then when I originally starting investing.
From what I understand, speculation is trying to make a profit on something without any change occurring to that said thing.
E.g Buying a home and selling it for a profit after the market moves up is speculation, vs, buying a home and renovating it and selling it at a profit because you made it better.
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Speculation is akin to usury because you're not really doing anything to contribute the actual value of the item. I buy some options to buy wheat and then the price of wheat goes up, and I sell it for a profit. Did I do anything to actually earn the money? I did absolutely nothing to help produce the wheat.
But if you do things like buying a home and selling it later when the price goes up, well, that's a different story ... and it's caused by inflation that's the direct result of this usury system set up the Jєωs. So, for example, with the recent spike in home prices, my home's value went up by like 25% in a year. Well, I could have sold to collect the "profit", right? Well, I still need a home, and so any home that I would try to BUY would also be 25% higher than it was before. So I'm not really making any "profit" as the cost of home ownership has gone up proportionally. That's cause by inflation, which is the direct result of the Jєωιѕн usury system.
This re-definition of usury as "excessive" profit is completely incorrect and a cop-out, and it's theologically incorrect, but, practically speaking, it's probably a decent rule of thumb because we have no choice but to operate within this Jєω system. Because everything is inflating due to the system, it's probably a decent practical rule even if it's caving on the actual theological principle (but we have no choice really).
Given that our system is constantly inflating, if you lend money out at 0% interest, you're actually losing money because of inflation over time. If inflation for next year is 10% and you've held onto my money at 0% interest for a year, I've actually lost 10% of the value of my money. So I incur a loss, effectively, by lending the money. So given the system, I might be justified to ask for 10% interest (due to inflation). This would not actually be profit, since the 10% is based on the loss I would incur. But the only reason this is true is that we're stuck in this corrupt usurous system to begin with. So, in principle, this is usury, but usury begets usury, etc., in a vicious cycle, so in the practical order we have no choice but to participate in this corrupt system until we get God's Great Reset.
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https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
You may find this useful. Goes into depth of what usury is, what loans are and destroys all modernist/gradualism cope.
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https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
You may find this useful. Goes into depth of what usury is, what loans are and destroys all modernist/gradualism cope.
This person makes a case that only full recourse (mutuum) loans are usury (and all mutuum loans are usury), and non recourse (societas) loans are not usury regardless of how moral/ethical they are.
This distinction certainly sheds light on statements made by the Church and Aquinas, and actions the Church has done.
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When a Jєω provides you with a mortgage, not only does the Jєω secure his investment with the collateral of the home (and homes tend to appreciate) AND charge you thousands in "closing fees" and sometimes even make you pay for "mortgage insurance" (generally if you have < 20% equity in the home), but they ALSO make inordinate amounts of money in excess of the home's value. If you take out a mortgage on a $250,000 home, you'd end up paying about $750,000 by the end of 30 years. That is gravely sinful usury. They should be making their salaries from the fees
So a non-usurous home "loan" would entail a few hundred dollars worth of closing costs and fees, a monthly servicing fee (probably no more than $50 per month, since it's nearly all electronic and automated), and a certain amount of mortgage insurance (probably no more than $200, depending on your credit "risk"), along with principle payments. If the home needed to be foreclosed upon, the home should be sold for market value, and the bank should have only as much stake in the property as would cover the amount of remaining principle, while the mortgagee would receive as much of the principal he paid into it, minus any fees/costs associated with the foreclosure itself.
Retired loan servicing employee weighing in. Thoughts:
Financial institutions make money hand over fist on service fees, in fact, it's a major "cash cow" for a loan servicer. It consists of a "spread" every month, for instance, if you have a loan on which you pay 5% interest, 4.75% gets passed through to the investor (e.g., FNMA), and the servicer retains 0.25% to pay the servicing employees and other expenses (data processing systems, etc.), as well as to generate profit. $50/month is in the ballpark, in fact, I figured it up one time and on the average loan, it's about $37.50 per month. So at least that portion of one's mortgage payment is by no means usury.
Mortgage insurance (PMI) is assessed monthly, not as a lump sum. It works out to between $30-$70 per month. It's bundled into your monthly payment. Word to the wise, try to pay at least 20% down. PMI came into being to accommodate those who want to buy a home, but don't have the 20% down payment.
Owning your own home free and clear is one of the best assets you can have. True, on a $250K loan, over 30 years, you've paid about $750K. Thanks to my father's shrewd investments over the years (we weren't rich folks by any stretch of the imagination), my son will never have a house payment if he remains in the home we live in now. (My parents' house will come to me, also paid for, one reason I can live on a shoestring is because I have no house payment.) I've told him time and again that NO 18-year-old owns their own home. (It has to stay in my name for several reasons, but as a practical matter, it'll be his house.) Many people are one paycheck away from being out on the street.
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Retired loan servicing employee weighing in. Thoughts:
Financial institutions make money hand over fist on service fees, in fact, it's a major "cash cow" for a loan servicer. It consists of a "spread" every month, for instance, if you have a loan on which you pay 5% interest, 4.75% gets passed through to the investor (e.g., FNMA), and the servicer retains 0.25% to pay the servicing employees and other expenses (data processing systems, etc.), as well as to generate profit. $50/month is in the ballpark, in fact, I figured it up one time and on the average loan, it's about $37.50 per month. So at least that portion of one's mortgage payment is by no means usury.
Mortgage insurance (PMI) is assessed monthly, not as a lump sum. It works out to between $30-$70 per month. It's bundled into your monthly payment. Word to the wise, try to pay at least 20% down. PMI came into being to accommodate those who want to buy a home, but don't have the 20% down payment.
Owning your own home free and clear is one of the best assets you can have. True, on a $250K loan, over 30 years, you've paid about $750K. Thanks to my father's shrewd investments over the years (we weren't rich folks by any stretch of the imagination), my son will never have a house payment if he remains in the home we live in now. (My parents' house will come to me, also paid for, one reason I can live on a shoestring is because I have no house payment.) I've told him time and again that NO 18-year-old owns their own home. (It has to stay in my name for several reasons, but as a practical matter, it'll be his house.) Many people are one paycheck away from being out on the street.
I am going to pull out some quotes from the above link (and also from other pages on the blog).
Is a home loan usury?
A non recourse home loan is not usury, because the lender has recourse to the house and the house alone for recovery of principal and interest. In practice most mortgages allow for a deficiency judgment against the borrower, though, and those mortgages are usurious.
In short, once I understood the teaching it seemed extraordinarily commonsensical and fitting: it is unjust to charge “rent” for the use of money -qua- money, since money -qua- money has no productive use in itself; but it is not unjust to charge “rent” for the use of real co-owned assets.
These notions in the air that either (1) medieval Church teaching on usury was hopelessly naive, (2) modern conditions are such that that teaching hardly ever applies in practice in the modern world, or (3) that if we accept Church teaching on usury we have to abandon private property or go down some other ideological rat hole, are simply wrong."
Usury involves treating people (subjects) as things (objects), because it involves purchasing “Bob owes me principal and interest” as opposed to purchasing shares in that project there or that bundle of assets there, distinct from particular persons
Furthermore, “Bob owes me principal and interest” is not a thing which actually exists. Charging rent for literally nothing, no thing, is intrinsically unjust.
The principal is you buying the bank's share of the house over time. The interest is the rent you pay for the part of the house that the bank owns. Sure it might be unethical or immoral the way the current system works. But whether is it usurious will depend on if it is 'mutuum' (according to the blog guy).
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I am going to pull out some quotes from the above link (and also from other pages on the blog).
The principal is you buying the bank's share of the house over time. The interest is the rent you pay for the part of the house that the bank owns. Sure it might be unethical or immoral the way the current system works. But whether is it usurious will depend on if it is 'mutuum' (according to the blog guy).
This post was me, I forgot to check the box.
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This post was me, I forgot to check the box.
If you can identify specific individuals who are personally liable under the agreement to return your principal and pay you profitable interest, the contract is usury. If you cannot identify any such individuals, the contract is not usury.
Another quote from the same page
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Another quote from the same page
) Is it morally licit to charge interest on a full recourse loan just to cover inflation?
No. The answer is implicit in Question 35 (https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/#35) — once you’ve grasped the difference between mutuum and societas it becomes clear that the price of the ‘currency’ most likely will fluctuate all over the place relative to other things, whatever is used as currency. The mutuum might be in wheat or oranges or even computers or cars as opposed to dollars; but that doesn’t change the nature of the contract.
So if it is an interest bearing mutuum it is usury, and the inflation rate (or price fluctuation between commodities or currencies generally) is irrelevant.
In effect what the “just-to-cover-inflation” usurer is attempting to do is enslave the borrower (as opposed to purchasing claims against some actually existing property) as an inflation hedge. All property is subject to entropy, decay, devaluation, theft, political unrest, changes in market conditions or personal circuмstances, and other risks. It is fine generally speaking to make investments as a hedge against this, in an effort to preserve wealth; but it is not morally licit to make usurious loans as a hedge against this.
[Some folks have found this approach to the answer confusing, so I answered it again from a slightly different perspective in Question 53 (https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/#53)]
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Above post was me
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I am going to pull out some quotes from the above link (and also from other pages on the blog).
The principal is you buying the bank's share of the house over time. The interest is the rent you pay for the part of the house that the bank owns. Sure it might be unethical or immoral the way the current system works. But whether is it usurious will depend on if it is 'mutuum' (according to the blog guy).
That makes sense. I'd never thought of it that way before. If you weren't paying a mortgage, you'd just be paying rent, which would be as much or more than the mortgage payment, and at the end of the mortgage term, you have a house, whereas when you pay rent, at the end of 30 years you just have 360 cancelled checks. And lenders, unless they hold the loans in-house, aren't making any money off the interest (aside from service fee as noted above), they pass that on to the investor (e.g., FNMA mortgage security holders).
I can tell you that lenders do NOT want to foreclose, in actual practice, they will bend over backwards to do everything to accommodate a delinquent borrower. Foreclosure can take a year or more, and when a lender ends up with a house, nobody wins (unless it would be someone who gets it for a song at a foreclosure sale). They typically work with borrowers to bring them current, or to recast the loan into something that the borrower can pay. They're not Simon Legrees rubbing their hands together and just lying in wait to snatch someone's house away from them.
I've seen more loans than I can count, made to people who clearly couldn't afford the homes, nor make the payments, for various reasons including social equity and avoidance of even the appearance of discrimination. Political correctness plays a huge factor in credit decisions.
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From the comment section on a related page
When banks behave morally, they securitize property; when they engage in the sin of usury, they securitize people.
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That makes sense. I'd never thought of it that way before. If you weren't paying a mortgage, you'd just be paying rent, which would be as much or more than the mortgage payment, and at the end of the mortgage term, you have a house, whereas when you pay rent, at the end of 30 years you just have 360 cancelled checks. And lenders, unless they hold the loans in-house, aren't making any money off the interest (aside from service fee as noted above), they pass that on to the investor (e.g., FNMA mortgage security holders).
I can tell you that lenders do NOT want to foreclose, in actual practice, they will bend over backwards to do everything to accommodate a delinquent borrower. Foreclosure can take a year or more, and when a lender ends up with a house, nobody wins (unless it would be someone who gets it for a song at a foreclosure sale). They typically work with borrowers to bring them current, or to recast the loan into something that the borrower can pay. They're not Simon Legrees rubbing their hands together and just lying in wait to snatch someone's house away from them.
I've seen more loans than I can count, made to people who clearly couldn't afford the homes, nor make the payments, for various reasons including social equity and avoidance of even the appearance of discrimination. Political correctness plays a huge factor in credit decisions.
In Australia having a mortgage is cheaper than renting. Renting prices are insane.
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In Australia having a mortgage is cheaper than renting. Renting prices are insane.
I've had many a loan file plopped down on my desk, and all I had to do, was take a look at it, and say to myself "these people will be in default in a year". Sadly, I was often right.
My institution bent over backwards to accommodate people of every demographic, and they still ended up paying a $100K fine for alleged housing discrimination.
I wasn't in the position to make any sort of decision. By the time it got to me, the loan was already made, I just had to do the clean-up when the loan went bad. You have no idea what kind of problems such loans make for servicers.
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https://youtu.be/NDocD0tOMmE
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https://catholicism.org/yes-usury-is-condemned-by-the-catholic-church.html
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In Australia having a mortgage is cheaper than renting. Renting prices are insane.
For example one way to think about a non recourse “loan” (and you will see some folks discuss it under this kind of framing) is to think of it as a mutuum together with an additional contract. This “add on” contract removes the personal pledge for repayment and replaces it with a pledge to transfer ownership of specific property if the borrower stops making payments: thus we get a non recourse loan. It is from this second, add-on contract, which grants the lender an ownership interest in the collateral and cancels the borrower’s personal obligation to repay, that a just title to profit arises.
However when the terminology is used that way – when the most essential property of a mutuum (Aquinas: “the borrower holds the money at his own risk and is bound to pay it all back”) is removed and replaced by a pledge of actually existing property which fully bounds and terminates the borrower’s obligation – it is editorially more clear to just recognize that what we have is an essentially different kind of contract. These kinds of contracts in fact have their own names: a census (See Question 31) or non recourse mortgage (see the full citation of “Usury and Contract for Rent” from Regimini Universalis), along with explicit approval by the Magisterium as non-usurious when non recourse.
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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.
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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.
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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.
Was me
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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.
You can't get a deficiency judgment simply by not paying a mortgage loan. You just lose the subject property.
Again, mortgage bankers don't want to foreclose, and they exhaust every other possibility before they actually go that far.
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You can't get a deficiency judgment simply by not paying a mortgage loan. You just lose the subject property.
Again, mortgage bankers don't want to foreclose, and they exhaust every other possibility before they actually go that far.
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.
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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.
That's exactly what the term means.
But as to your first point, over the course of 30 years (or however long the loan term is), the lender has demanded FAR more than the value of the collateral, a ballpark figure being 3X the cost of the house (e.g., for a $200K loan, you will pay $600K over 30 years).
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That's exactly what the term means.
But as to your first point, over the course of 30 years (or however long the loan term is), the lender has demanded FAR more than the value of the collateral, a ballpark figure being 3X the cost of the house (e.g., for a $200K loan, you will pay $600K over 30 years).
Unethical but not usurious (according to the blog). The first point is more so about if the borrower defaults and can't pay back. It one thing to have nothing, it's another thing to owe money while also having nothing.
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https://truthfulhistory.blogspot.com/2016/02/special-offers.html
Scroll down...
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https://truthfulhistory.blogspot.com/2016/02/special-offers.html
Scroll down...
Does hoffman man make the mutuum distinction? I do know that he fails to mention loans (usury?) Started in the east before the west.
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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.
another quote
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Usury = interest = bad. The end.
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Usury = interest = bad. The end.
This sort of simplicity is extremely dangerous not only for people with scruples... It's also wrong, as even the Church Magisterium allows interest in some cases. Understanding the distinctions between, mutuum, societas and census loans, full-recourse and non-recourse, and asset-recourse vs person-recourse, has been very helpful to me.
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Unethical but not usurious (according to the blog). The first point is more so about if the borrower defaults and can't pay back. It one thing to have nothing, it's another thing to owe money while also having nothing.
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.)
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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.
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Those fees could possibly be other extrinsic contacts.
Titles*
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Those fees could possibly be other extrinsic contacts.
No, they are expenses incurred by the lender to keep the abandoned property in good condition and up to local codes, HOA covenants, and so on, as the case may be. They're not something that is foreseen when the loan is made, nor are they "folded into" the loan. Any mortgage has a stipulation in it that the borrower has to keep the property in decent condition (not sure if that would go as far as keeping the grass cut), in that it is the security for the loan, "collateral" if you will (though that term is not used WRT a mortgage). If the borrower has "flown the coop", then the lender has to step in, to preserve the integrity of the property. Keeping it looking good for future resale would also be a consideration. A slovenly lawn or a property with siding coming off isn't appealing to a prospective buyer, unless they see it as a "fixer-upper" or "handyman's special", which would bring the price down at which it could sell.
You have to keep a house up, or it will go to rot. Right now I've got gutters full of pine needles, neglected due to my late father's illness, and I'm going to have to get a work crew to come in next week and clean them out. I can't tolerate heights and I don't know anything about cleaning gutters.
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No, they are expenses incurred by the lender to keep the abandoned property in good condition and up to local codes, HOA covenants, and so on, as the case may be. They're not something that is foreseen when the loan is made, nor are they "folded into" the loan. Any mortgage has a stipulation in it that the borrower has to keep the property in decent condition (not sure if that would go as far as keeping the grass cut), in that it is the security for the loan, "collateral" if you will (though that term is not used WRT a mortgage). If the borrower has "flown the coop", then the lender has to step in, to preserve the integrity of the property. Keeping it looking good for future resale would also be a consideration. A slovenly lawn or a property with siding coming off isn't appealing to a prospective buyer, unless they see it as a "fixer-upper" or "handyman's special", which would bring the price down at which it could sell.
You have to keep a house up, or it will go to rot. Right now I've got gutters full of pine needles, neglected due to my late father's illness, and I'm going to have to get a work crew to come in next week and clean them out. I can't tolerate heights and I don't know anything about cleaning gutters.
Hmmm at the very end of the page he gives his definition for non recourse.
As with just about any term, “non recourse” can be interpreted a number of ways, generally as a cluster of related but sometimes incompatible meanings. I am not attempting here to make my usage conform to some particular legal jurisdiction or what have you – that is entirely irrelevant to understanding what usury is and is not. The way it is used throughout this FAQ is that in a non recourse contract it is not a violation of the contract terms for the ‘borrower’ to stop making payments on the loan, leaving the ‘lender’ to recover whatever he is entitled to recover from the collateral and the collateral alone. The ‘borrower’ has not violated the terms of the contract in this case, by definition: the agreement was that if the borrower stops paying, he is quit of all obligation under the contract. The lender gets to foreclose on the collateral to recover his entitlements and costs, and the lender’s recourse is to the collateral alone. If the collateral is worth more than the loan balance and any actual costs then the excess is due back to the borrower.
If the contract terms say that it is a violation of the contract for the borrower to stop paying and turn the collateral over to the lender, then the loan is a mutuum and any interest charged is usury. The lender may be limited to recovering his principal and interest from the collateral legally, but the borrower is understood to have violated the terms. This is not a ‘non recourse’ loan the way the term is used throughout this FAQ, though other people in other places may refer to this understanding as ‘non recourse’.
In short, there are (at least) two ways of understanding recourse. In the first way recourse refers to what the various parties to the contract are entitled to in the scenarios covered by the contract. It answers questions like “who gets what if the borrower stops making payments”, as a matter of what the agreement between the parties itself requires. In the second way, recourse refers to legal remedies under the positive law when someone breaks the agreement. “Recourse” in this second sense is not a part of what is agreed by the parties in the contract itself. This FAQ uses the term ‘recourse’ in the first sense, to refer to the terms of the contract itself.
This understanding comes from the Magisterium of the Church, not from any modern financial theory or practice. “Non recourse loan” just happens to be the closest term in common use these days capable of carrying the concept, and we are looking at the intrinsic nature of different kinds of contracts in order to understand usury.
As a practical matter, the fact that the borrower is entitled under the contract terms to ‘walk away’ means that it is in the lender’s best interests to make sure that the value of the collateral significantly exceeds the amount loaned. The lender – on this understanding of a non recourse loan – is taking a property interest in the collateral, and if the value of that property drops below the loan balance the borrower is perfectly within his rights, under the terms of the contract, to walk away and leave the lender holding the property.
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I didn't see all of this. I'll check it out.
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Turns out the blog post
https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
Actually has a book
https://www.amazon.com/Usury-Frequently-Asked-Questions-Zippy/dp/1544688873/
and a PDF
http://schnecke.bombcar.com/random/usury.pdf
Unlike the blog post the book and PDF have references to Church teaching at the end.
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Turns out the blog post
https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
Actually has a book
https://www.amazon.com/Usury-Frequently-Asked-Questions-Zippy/dp/1544688873/
and a PDF
http://schnecke.bombcar.com/random/usury.pdf
Unlike the blog post the book and PDF have references to Church teaching at the end.
:jester: Look at the ad below this post!
(https://i.imgur.com/iEsnyW0.jpeg)
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Turns out the blog post
https://zippycatholic.wordpress.com/2014/11/10/usury-faq-or-money-on-the-pill/
Actually has a book
https://www.amazon.com/Usury-Frequently-Asked-Questions-Zippy/dp/1544688873/
and a PDF
http://schnecke.bombcar.com/random/usury.pdf
Unlike the blog post the book and PDF have references to Church teaching at the end.
There are also works by Brian McCall who was on a podcast recently posted here.
https://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=663056
More specifically
https://angeluspress.org/products/church-and-usurers