Question
My wife and I have a million-pound mortgage from Metro Bank where an irreligious Jew recently became the majority shareholder. The local rabbis publicized that one may no longer deal with them. I will suffer a major loss if I need to repay the mortgage immediately because interest rates rose significantly in the interim and also there is a penalty for repaying more than twenty percent in a year. What is the problem and is there a solution to the problem?
Answer
In the first part we learned that a mortgage is just an ordinary interest-bearing loan. Rav Moshe Feinstein ruled that there are two options available for a Jewish-owned bank to grant mortgages to Jewish customers. One is by structuring the mortgage as an iska and not a loan and the other is to structure the mortgage as a complex sale. The bank could have accommodated its Jewish customers by converting all their mortgages into an iska, but since the bank refuses to do so this option is not available. The second option is not commonly used and cannot be done without the bank’s active involvement.
We also saw that whenever a Jew has a sizable enough stake in a company that it grants him a say in the conduct of the company’s business, he is considered an owner of the company (a partner). Thus, people who took mortgages after this Jew acquired a sizable stake in the bank, according to many poskim, were guilty of borrowing with interest at the time they took the mortgage, even before he was the majority shareholder.
If you took your mortgage before a Jew had a significant stake, you borrowed with interest from a non-Jew who then sold his loan to a Jew. When you took your mortgage, you acted fully in accordance with Jewish law since one may borrow with interest from a non-Jew. The problem you have is that now that a Jew has become an owner you are the borrower of an interest-bearing loan from this Jew, and you must pay interest to this Jew who acquired the loan.
To fully understand the problem, it is essential to determine the nature of the laws that are violated when one borrows money with interest from a Jew. Even though this is not what you did if you originally borrowed from a non-Jew, these laws will determine your situation as well.
The source in the Gemara for this information is a statement of Abaye (BM 75B) that a Jew who borrows with interest violates two Biblical laws: 1-lo sashich-one must not be the “victim” of (literally-bitten by) an interest-bearing loan, and 2-lifnei iveir-one may not put a stumbling block in front of the blind, which includes (or means) that one may not cause a Jew to sin.
When one borrows with interest from a Jew, he causes the lender to violate a Torah law. Thereby the borrower also violates the prohibition of causing the lender to sin in addition to his own sin of borrowing with interest. We must determine if these sins are violated only at the time that one actually borrows or only when he pays the interest or at both times.
According to all opinions one violates the first prohibition when he pays interest to a Jew who holds the loan because that is when he is actually suffering from the fact that the loan carries interest and is not an interest-free loan as the Torah requires. Many opinions (e.g., Taz (160, 11) maintain that since one only suffers when he actually pays, that is the only time when one violates this prohibition. The Avnei Neizer (YD 144) writes that this is why the expression used by SA (YD 160, 1) when he records this prohibition is, “the borrower who pays.” This indicates that the only time the borrower violates this prohibition is when he pays interest. One who borrows with interest but somehow manages to avoid actually paying interest on the interest-bearing loan that he took, never violates this prohibition.
The opinions that disagree and maintain that one violates this prohibition even at the time he borrows, agree that he also violates the prohibition when he pays the interest. Therefore, the fact that when you borrowed you did not borrow from a Jew makes no difference now as far as the prohibition of lo sashich is concerned. You will violate this prohibition every time that you pay interest.
To determine whether you will violate the second prohibition, lifnei iveir, when you pay interest, we have to understand the nature of this prohibition. Since the content of this prohibition is that one may not cause a Jew to stumble by violating a law, whenever, the lender violates a law, the one who enabled him to violate the law violates the second prohibition. Thus, to determine when the borrower violates the second prohibition we have to consider when the lender violates a prohibition.
The Mishna (BM 75B) lists five Biblical prohibitions that one who makes an interest-bearing loan violates. One of these is that one may not extend an interest-bearing loan and another is that one may not accept payments of interest. One who borrows with interest thus violates the second prohibition both at the time that he borrows and at the time he pays the interest. Thus, every time you pay interest you will violate this prohibition as well.
The situation where a person borrowed with interest at a time when it was permitted and in the middle of the loan period it became prohibited to pay the interest occurs also when a person borrowed with interest from a gentile who converted to Judaism before the loan was fully repaid. The SA rules (YD 171) that the convert may only collect interest that accrued prior to his conversion, but must forfeit any interest that accrues subsequent to his conversion. Similarly, if the bank would abide by Torah law, it would have to forfeit all future interest on its mortgages or convert each of them into an iska. Your problem is that the bank refuses to do either and thus you are in a situation where the only way to avoid violating Torah law is by paying off your mortgage.
The situation that you are in, where a Jew owes money with interest to a partnership where some of the lenders are Jewish and some are non-Jews, is not new. The problem of paying interest in this situation was discussed in earlier generations. At one time it was common practice for the local population to pool their assets and to form a local “bank,” and the Kitsur Shulchan Aruch (65, 28) addresses the issues. He rules that a Jew may not place his money in such a partnership since it is possible that a Jew will borrow his money. It is also forbidden for a Jew to borrow from such a partnership since it is possible that the money he is borrowing belongs to a Jew.
The author of the Kitsur asked the Shoeil Umeishiv (Kamo: 3, 31) about his ruling and the latter disagreed. He replied that one does not have to be concerned about paying interest because once the assets are placed in a pool, they no longer belong to the one who placed his money in the pool, but rather they are “owned by the pool.” (His reasoning is not clear because first he says one may rely on breiro even though the prohibition is Biblical and then he says that this is not a breiro situation.) Therefore, one who lends to or borrows from the joint fund never lends to or borrows from a Jew, according to the Shoeil Umeishiv.
However, the Beis Yitzchok (YD 2, Kuntress Acharon 32) was questioned about such a fund. In his response he comments that the leniency of the Shoeil Umeishiv applies only to funds where the majority of the assets of the fund belong to non-Jews. Therefore, this leniency does not apply in your current situation. According to the Beis Yitzchok the leniency of the Shoeil Umeishiv is only that it would have permitted taking a mortgage from this bank earlier, before a Jew became the majority shareholder. However, all the major later poskim (with the exception of the Rogotzover) including Rav Moshe Feinstein, the Minchas Yitzchok, Rav Eliashev and Rav Shlomo Zalman did not follow the Shoeil U’meishiv’s ruling. Even the Kitsur Shulchan Aruch refused to change his ruling as the Sho’eil Umaishiv instructed him to do. (As a result, the Shoeil U’meishiv refused to give an approbation to the Kitsur.)
Thus, we have established that if you fail to repay your mortgage before your next payment you will violate at least two Biblical prohibitions by making that payment. Each subsequent time that you pay interest you will again violate at least two Biblical prohibitions.
Since you wrote that you will suffer a major loss if you prepay the remainder of the mortgage we have to consider if one may violate a Biblical prohibition in order to avoid a major monetary loss.
The SA addresses this issue (OC 656) and writes that one must spend up to a fifth of his assets in order to fulfill a positive commandment, but he must give up all of his assets in order to avoid violating a negative commandment. Since the commandments that you will need to transgress in order to prevent a loss are negative commandments you have no choice but to repay your mortgage immediately. (The Gro (OC ibid and YD 157) proves that even if the negative commands are rabbinic, one must forfeit all of his assets.)
However, the Mishnah Berurah (656, 9) explains that the reason we differentiate between positive and negative commands is not because of the difference in the nature of commands but because of the manner one violates these commands. When one fails to heed a positive command, he does so passively whereas, one usually violates a negative command by means of an action.
Usually, when one makes a payment of interest he performs an action, which one may not do even at the cost of all of his assets. However, if you have money in an account from which the bank draws out mortgage payments without any action on your part and the loss that you will suffer is more than a fifth of your total worth, according to this approach you could perhaps remain passive and allow the bank to continue drawing your payments. Note that the Jewish-owned bank continues in its Biblical violations in this situation.
However, even this leniency is controversial. Even though the MB seems to have followed this approach it is not agreed by all. The Pischei Teshuvo (YD 157, 4) discusses this issue and cites the Pri Megadim and Chavos Yo’eir who follow this approach and furthermore, the Chasam Sofer (Notes to OC 656) and others agree. However, the Rivash (res 387) who was much earlier disagrees. (See Alei Zevach chapter 6 for a lengthy discussion.).
Furthermore, it is also controversial if not taking action where as a result a Jew will actively violate a prohibition is considered not acting and remaining passive. This depends on two approaches of Tosafos (Shavuos 30B). Additionally, it is rare that a person will be in this situation since included in calculating a fifth of one’s worth is the portion of the property that is not mortgaged. Nonetheless it may happen.
In conclusion: In almost all cases you are required to suffer a loss, even a major loss, in order to avoid the prohibitions that you will otherwise violate whenever you pay interest. By paying up your mortgage you will not only avoid these prohibitions and you will also fulfill the mitzvah to love Hashem with all your means in a way that few people have the opportunity.
Also, nowadays institutions that originate mortgages often sell them off to others. You should determine who is the current owner of your mortgage and how it affects you. This can be used to resolve the current problem. Perhaps, a wealthy G-d fearing Jew would purchase from the bank all the mortgages that were taken by religious Jews and convert them into iskas.
