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Participation in Lending Club

Shalom,

Could you please address these questions
1.
as of recently many investment places started to advertise the new “safe investment” so called tax lien certificate, when homeowner fails to pay property taxes, but city needs taxes right away it sells tax certificate for this unpaid taxes, when homeowner eventually pays the taxes with the interest, the city re-pays the interested with investment; while investors knows what property he buys tax certificate for, I am not sure if owner information is readily available.

The issue here that if the investor is the Jew and he without knowledge buys the tax certificate on the property that owned by the Jew. Here is what can potentially be very problematic. Tax certificated can be paid by the home owner at any time ( if he will not pay in a few years he can potentially lose the property).

I never had anyone discussing this issue anywhere, but should not be the practice of buying tax certificate be forbidden given the risk involved and how serious are law treats usury

2. This is similar to 1. as of recently so called peer-to-peer lending group come up . See https://www.lendingclub.com/ as “investor” and the “borrower” do not know each other, but as you can see from the occasional “featured borrowers” there are Jewish borrowers. Again, should not this to be forbidden as well.

In both cases “1” and “2” the debt can be repaid any time. Do you know of any halachic ruling specific to “1” and “2” and how to make the regular Jews aware of theses issues, I do not think they are discussed at all.

If this all is “forbidden” there is a need to make Jews aware of this practices, how to achieve that?

Answer:

1. This does not appear to be a problem. From your description the certificate is an arrangement between the city and the investor, and not between the homeowner and the investor. The homeowner is therefore paying interest to the city, and not to the investor, and the city (after receiving it from the homeowner) is passing on the interest to the investor. In addition, it is assumed that the majority of the city is comprised of non-Jews, and therefore we can assume that the homeowner is not Jewish – though there is room to consider that this is kavu’a, in which case we will not follow the majority (though it remains a safek, a matter of doubt as to whether the homeowner is Jewish or not).

2. From what I gathered, in this case the loan is made directly from the investor to the borrower, and therefore the logic used in (1) will not apply. However, the majority of borrowers are not Jewish, and therefore one can follow the majority and assume that the borrower in question is not Jewish. However, this is only true if one does not know of Jewish borrowers in the club. If one knows that there are Jewish borrowers in the club, and the known Jewish borrowers cannot be excluded (meaning, there is a chance that one of the known Jewish borrowers will be receiving the money), then these Jews will be kavu’a in the group, and we will no longer be able to assume that the borrower is not Jewish. Thus, one should not participate (under these circumstances) in the “club.”

Best wishes, and sorry for the delay in replying.

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