If a person desires to make a geographical move, whatever the motive, and has a house to sell and the house is worth less now than it was when it was purchased, is it ethical for that person to arrange for a short sale? Who has to “eat” the losses that result in a short sale? With the rapid rise of short sales in the United States, the question is rising in the minds of many, “Is it ethical?” Can I simply walk away from my debts? What do I need to know? What are the ethics of a short sale? How do I feel about this? Will I feel guilty years from now? Will it be a dark cloud that hangs over my head? Will it ruin my reputation? What about my credit score? How will it affect my chances of getting a job in the future?
All of these questions have multiple answers depending on who you talk to. Years from now, psychologists may be busy counseling people who walked away from debt when they were younger but then live to regret it when they are older. So what is the answer regarding a short sale or a strategic default. Is it ethical?
Whether you are a buyer, seller, real estate agent, lender, or curious tax payer, you must find an answer to this question. The best place to look to find the correct answer is to look at a written code of ethics. You can find many books written on ethics. One of the best books just happens to be the Bible. The Bible has a lot to say about money and debt. Jesus talked a lot about money. He recognized the fact that it is an important issue. So what does the Bible say on this subject of “short sales”?
“Who may stay in God’s temple or live on the holy mountain of the LORD? Only those who obey God and do as they should. And they keep their promises, no matter what the cost. Psalm 15:1,2,4b CEV
One could look at this verse as saying, “A righteous man keeps his promises, even if it ruins him.” When someone signs a contract to pay a certain sum of money, that is a promise. That contract and debt could be for a car, house, education, or personal loan from a family member or friend. The word “ruin” here obviously refers to financial ruin or the ruin of a person’s reputation.
What do you deduct from these verses? Should a person, regardless if they are Christian, Jewish, Muslim, Hindu, atheist, or any other world faith engage in an attempt to rid themselves of a financial obligation through a short sale? What if they even have the financial means by which to cover the debt but their financial adviser tells them to do a short sale and hold onto their investments?
What about a Christian who feels called into the ministry and needs to make a move and sell a house that is worth less than they paid for it? What do the scriptures say about the action that person should take? A Christian especially, should uphold the reputation of his faith by fulfilling his promises – large or small.
Although legal, is the implementation of a strategic default ethical? Was the signing of a mortgage agreement a promise to pay a debt regardless of the value of your house if it went up or down? What would Jesus do? Would he walk away from his debts?
Luke 16:10 says, “Anyone who can be trusted in little matters can also be trusted in important matters. But anyone who is dishonest in little matters will be dishonest in important matters.” CEV
Should a Christian short sale their home?
What do you think? Leave a comment.