MAILBAG: The Mortgages For Yungerleit Idea Is Great, But… Not Really

First of all, I want to give kudos to the person who wrote about a possible solution that would allow yungerleit to get affordable mortgages. He clearly thought the issue through and came up with a feasible-sounding solution. I say feasible-sounding, because I don’t think it’s practical at all.

As well-intentioned as it is, there are a few glaring problems that jump out at me. For one, a clearly more well-versed commenter than myself noted on the letter itself that there are numerous issues with this solution, though someone responded (I assume the letter writer) with counterpoints.

I think there are an additional two issues with this proposed solution that need serious contemplation. The first is that the letter writer seems to assume that giving money into such a fund is as risk-free as keeping your money in a high-yield bank account. It’s not. Anytime money is lent to others there’s risk involved. So even with the argument that yungerleit don’t go into foreclosure at the rates of other demographics (he didn’t provide any evidence or reason to believe this is true), why would someone with money to invest put it in a relatively risky fund when they can make the same returns with zero risk? This is a particularly acute problem when you consider that for such a fund to work, hundreds of millions of dollars would have to be raised. Where is that money coming from?

Secondly, and perhaps the ikkar problem, is that if a mortgage goes south, the fund would have to foreclose on properties. That means a frum Jew would have to kick another frum Jew out of his house. The storm that something like that would create is terrifying to even think about. The fund managers will be called reshaim in the blink of an eye, batei dinim would step in, and the whole fund would simply collapse on itself.

Now, someone commented something similar to this on the previous letter, with the letter writer responding that it’s “a difficult issue, but it’s either have a system or there’s no system. You have another option? We’re not talking about someone who bought a house at a sheriff auction at the expense of a poor yid, this is an idea to get affordable mortgages, and the only way to have it is if there’s a system.”

The response simply doesn’t fly. The problem here is not just that it’s not a perfect system – it’s a system that is bound to fall apart because of this flaw!

For these reasons, I’m out.

D.S.

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