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Even When it Hurts: Strategic Default

June 28, 2010

In the past year it is estimated that at least a million Americans who can afford to stay in their homes simply walked away. — 60 Minutes

Strategic default. The name has an enticing ring to it. Who wouldn’t want to do something strategic, especially when talking about large sums of money? Increasing numbers of Americans are choosing “strategic default”, abandoning their commitment to make their mortgage payments because of the drop in housing prices, which left their homes worth less than the balance owed on their morgages — sometimes, much less. They let the bank foreclose on the house, and seek another house to buy at today’s deeply discounted prices.

What should a Christian think about this? Let’s look at a few scriptures.

Psa 15:1 LORD, who may dwell in your sanctuary? Who may live on your holy hill?
Psa 15:2 He whose walk is blameless and who does what is righteous, who speaks the truth from his heart
Psa 15:3 and has no slander on his tongue, who does his neighbor no wrong and casts no slur on his fellowman,
Psa 15:4 who despises a vile man but honors those who fear the LORD, who keeps his oath even when it hurts,
Psa 15:5 who lends his money without usury and does not accept a bribe against the innocent. He who does these things will never be shaken.

The Old Testament says a lot about keeping your oaths to the Lord.

Ecc 5:2 Do not be quick with your mouth, do not be hasty in your heart to utter anything before God. God is in heaven and you are on earth, so let your words be few.

Ecc 5:4 When you make a vow to God, do not delay in fulfilling it. He has no pleasure in fools; fulfill your vow.

Ecc 5:5 It is better not to vow than to make a vow and not fulfill it.

Ecc 5:6 Do not let your mouth lead you into sin. And do not protest to the temple messenger, “My vow was a mistake.” Why should God be angry at what you say and destroy the work of your hands?

Num 30:1 Moses said to the heads of the tribes of Israel: “This is what the LORD commands:

Num 30:2 When a man makes a vow to the LORD or takes an oath to obligate himself by a pledge, he must not break his word but must do everything he said.

Ecc 5:2 Do not be quick with your mouth, do not be hasty in your heart to utter anything before God. God is in heaven and you are on earth, so let your words be few.

Ecc 5:4 When you make a vow to God, do not delay in fulfilling it. He has no pleasure in fools; fulfill your vow.
Ecc 5:5 It is better not to vow than to make a vow and not fulfill it.
Ecc 5:6 Do not let your mouth lead you into sin. And do not protest to the temple messenger, “My vow was a mistake.” Why should God be angry at what you say and destroy the work of your hands?

Num 30:1 Moses said to the heads of the tribes of Israel: “This is what the LORD commands:
Num 30:2 When a man makes a vow to the LORD or takes an oath to obligate himself by a pledge, he must not break his word but must do everything he said.


Deu 23:21 If you make a vow to the LORD your God, do not be slow to pay it, for the LORD your God will certainly demand it of you and you will be guilty of sin.
Deu 23:22 But if you refrain from making a vow, you will not be guilty.
Deu 23:23 Whatever your lips utter you must be sure to do, because you made your vow freely to the LORD your God with your own mouth.

Pro 20:25 It is a trap for a man to dedicate something rashly and only later to consider his vows.

Certainly it would be sin to make a vow to God and then not to keep it.  But what about a promise made to someone other than to God?

Mat 5:33 “Again, you have heard that it was said to the people long ago, ‘Do not break your oath, but keep the oaths you have made to the Lord.’
Mat 5:34 But I tell you, Do not swear at all: either by heaven, for it is God’s throne;
Mat 5:35 or by the earth, for it is his footstool; or by Jerusalem, for it is the city of the Great King.
Mat 5:36 And do not swear by your head, for you cannot make even one hair white or black.
Mat 5:37 Simply let your ‘Yes’ be ‘Yes,’ and your ‘No,’ ‘No’; anything beyond this comes from the evil one.

It seems that the Jews had taken the Old Testament scriptures on oaths, and twisted them into a framework that allowed for breaking promises in all but a few limited cases. According to William Barclay:

The Jews divided oaths into two classes, those which were absolutely binding and those which were not. Any oath which contained the name of God was absolutely binding; any oath which succeeded in evading the name of God was held not to be binding. The result was that if a man swore by the name of God in any form, he would rigidly keep that oath; but if he swore by heaven, or by earth, or by Jerusalem, or by his head, he felt quite free to break that oath. The result was that evasion had been brought to a fine art.

The idea behind this was that, if God’s name was used, God became a partner in the transaction; whereas if God’s name was not used, God had nothing to do with the transaction. The principle which Jesus lays down is quite clear. In effect Jesus is saying that, so far from having to make God a partner in any transaction, no man can keep God out of any transaction. God is already there. The heaven is the throne of God; the earth is the footstool of God; Jerusalem is the city of God; a man’s head does not belong to him; he cannot even make a hair white or black; his life is God’s; there is nothing in the world which does not belong to God; and, therefore, whether God is actually named in so many words or not, does not matter. God is there already.

So Jesus corrected the Jewish implementation of those passages. For a Christian, your word should be your bond. If you promised it, you must do it. God is a witness and a partner in every transaction we make, and God is dishonored if we don’t keep our word.

Mat 12:36 But I tell you that men will have to give account on the day of judgment for every careless word they have spoken.

Taking out a mortgage can be a scary transaction. There are so many papers, so much fine print. It is the largest financial commitment most people ever make. And it commits them for decades into the future. But in a sense the deal is pretty simple. The bank provides the borrower with a large amount of cash, which the borrower uses to buy a house. In exchange, the borrower promises to make monthly payments for (typically) thirty years. That’s the deal. The bank makes good on their promise at closing. The borrower holds up their end of the bargain by making the payments. Or not…

If a borrower decides to stop making payments, it is the moral equivalent to robbery. The main difference between strategic default and bank robbery is that you are more likely to go to jail for bank robbery. But ethically there is not much difference.

If, instead of a strategic default, the buyer keeps his commitment and makes the payments all the way to the end, he will own the house. That was all he expected when he entered into the mortgage, and that was what he agreed to do.

Psa 37:21 The wicked borrow and do not repay, but the righteous give generously;

Strategic default is wickedness. No Christian should consider such a violation of their promise.

Next time: A startling example of keeping promises even when it hurts.

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