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Commentary - Ed Reid - 7-Year Christian Mortgage?!?

Ed Reid  - ‘Mortgage Debt Should Not Be Longer Than 7 Years (Deut 15:1)’
By My Spirit - Love Not The World. [3ABN #27]

SDA Statement: “...the Bible says that we are the salt of the earth, it also calls us the light of the world, but unfortunately many times the world is salting us more than we are salting it. And I'll give you this illustration: let's pretend like someone who does not believe in the Bible, or doesn't follow the Bible's guidance in his everyday living, wants to buy or build a house, how's he going to do it if he doesn't have the money? Well, he'll go to the bank and become qualified and get a loan. Unless he tells the banker different, the loan will be for 30 years. That's the typical thing in the US, but let's just say that a Christian, Bible believer, decides he wants to buy or build a house, he doesn't have the cash to pay for it, so he goes to get a loan, what will he do?
            Well, the interesting thing is unfortunately the Christian will do almost exactly the thing that the non-Christian does, and that's get a 30-year mortgage, without a second thought actually, in spite of the fact that the Bible indicates we should not be in debt longer than...you know, don't you?

7 years. Deuteronomy 15:1 gives that answer, not longer than 7 years. We're going to be able to  understand more about that. You'd say: "I could never pay a house off in 7 years", well, when we get the session #8, we're going to talk about the Christian approach to home ownership.”

Biblical Response: Here, well known SDA author and seminarist, G. Edward Reid, the now former NAD Stewardship director, frankly really puts the average homeowner on a hopeless guilt trip by effectively stating that signing up for a mortgage over 7 years goes against the supposed (specific) teaching of the Bible. First of all, the text that Reid, actually, misquotes and misapplies, Deut 15:1 does not even begin to say this. It instead says:

“At the end of every seven years you shall grant a remission of debts.”

            Self-evidently here, this is not a directive that is given to one who is in debt, but to the one who made the loan. The following verses clearly point this out as it says:

            “This is the manner of remission: every creditor  shall release what he has loaned to his neighbor; he shall not exact it of his neighbor and his brother, because the LORD'S remission has been proclaimed.” (vs. 2)

            Then it adds the provision that: 

            “From a foreigner you may exact it, but your hand shall release whatever of yours is with your brother.” (Vs. 3)

            No surprisingly in this Biblical directive, God’s way makes so much more perfect sense. Notwithstanding this, let’s suppose that in misusing this text, Ed Reid is seeking to have a “pretext” to preach that a Christian should not sign up for a mortgage for more than 7 years. As this website says:

“In order to qualify for a mortgage, most lenders require that you have a debt-to-income ratio of 28/36 (this can vary depending on the down payment and the type of loan you're getting, however). This means that no more than 28 percent of your total monthly income (from all sources and before taxes) can go toward housing, and no more than 36 percent of your monthly income can go toward your total monthly debt (this includes your mortgage payment).”   

             Using the current data that the average of the Regional median prices of U.S. homes of  $193,700 (see here).  To qualify here for a mortgage to be paid off in this supposed/targeted 7 years, and even if one has no other debts, and with a minimal 10% down payment, one will need an annual salary/household income of around $117,300 (5.00% interest rate). This is 2.2X the (2007) U.S. median household income of $52,300 (cf. here). The only mathematically possible option here, for e.g., a family with 2 children and having this median household income of $52,300, and capable of saving 39% (= $508/month) of their 30%  housing affordability (= $1308) would be to, ideally live in a 5½ rental unit costing (hopefully) around $800/months for 18 years (a little less with accrued savings interest included) until a down payment total of $111,293 can be saved up to put towards this $193,700 house. However. by then, i.e., in 18 years, such a home, or a comparable one, will more than likely cost 1.5-2X more! Otherwise one will need to settle for a 10X30 mobile home.
            All this to say that a default 7-year mortgage is practically non-feasible  and thus nonsensical in a market-driven, capitalistic economy.

Ed Reid’s ‘Anointed’ Method?!?
            As Reid states that his “Christian approach to home ownership” would validate his claim here, I sought out to find it. It was not in the next “By My Spirit” series broadcast, but actually, better than this 2007 series, I found a recent audio of his “It’s Your Money” Seminar given at Sligo SDA Church in Takoma Park, MD on February 22-23, 2008. (See here). Parts of his related book can be viewed online at Google Books
            Quite slyly Reid announces and entices this incredible mortgage payment method from the first of his five meetings, but does not concretely address it until the last part of his fifth and final meeting?!? And what is this ‘Anointed’ method? Plainly said, it is to make extra/advanced payments on your mortgage, minimally, the next’s scheduled payment. Ideally for this to really work, one needs to make as much extra payments as they could on their monthly payments.
            Notice that Reid does not outrightly recommend to sign up a shorter mortgage with the bank; or even the “Biblical” 7-year mortgage. The simple reason is that the average homeowner would probably not qualify for a repayment period less than 20 years, especially first time homeowners, which Reid greatly encourages instead of renting for, as he also says/posits: ‘you won’t build up any equity’ and/or ‘you could have four surrounding apartment neighbors who play rock music during the Sabbath.’ Again the issue here is: if one has money to qualify for a mortgage to buy a home instead of renting. If not, they’ll have to accept a 30 or 40-year mortgage in order to own a first home, e.g., straight out of college. Defaulty signing up for a shorter mortgage is also riskier because if one experiences some financial hardship and cannot make e.g., the $2200 payments as opposed to the $1100 for a longer mortgage, they risk having their home foreclosed and losing everything they’ve invested so far. On the other hand, with a default longer mortgage, they would be free to make any extra monthly payments that they can make. The end result is the same in both situation, but without the risks for a shorter mortgage. 
            Reid also recommend the popular method of making bi-weekly payments which actually simply results in the equivalent of making 1 extra monthly payment per year, and which goes directly towards paying the principle. Such a method does indeed reduce the loan repayment period by, typically, 20%, however to be able to make such payments will typically require a special re-arrangement with the loaning bank, which usually has significant extra charges. Additionally, it puts the borrower in a binding, contractual, bi-weekly repayment agreement which carries the normal penalties if any payment is missed. It is therefore less risker to simply, freely make additional 1/12 of a monthly payments per month which at the end of a year results in this extra monthly payment per year. There is very little difference in savings with this method than the binding bi-weekly payment, e.g., ca. $8.60 per month. (See e.g. this comparison). This is much less than the late fee or penalties for missing a binding bi-weekly payment would be due to e.g., a financial emergency.

A Pointless Correction/Harmonization Attempt
            Supposedly, Ed Reid, in that more recent seminar, appears to have noticed the fallacy of his previous application of Deut 15:1 to (mortgage/debt) borrowers, however he has not openly and unequivocally corrected this still airing false statement. No, that would come to discredit him. (At least not for being dishonest). Instead he strangely tries to now construe this statement to work through an, actually, fantastical and convoluted illustrative application which probably has absolutely no actual, concrete example in everyday reality. (Seminar #4 11:00-14:06). In making his illustration he reads Deut. 15:1 and now with verse 2 included and properly applies it to a lender, as he now realizes that: ‘it is very clearly written to the lender.’ However, here is where the wishful thinking fantasy starts. He states that for this to work the lender, which has been stated to be from a local bank, would be a Bible believing, Bible lender, adhering to Deut. 15:1, 2. This lender would then write a loan that would not exceed 7 years for its repayment. He even adds an extra illustrative constraint, supposedly believing that his application is thus far absolutely valid, that, as these 7 years are to be strictly reckoned periods, should one go to get a loan in 3rd year of an already started 7-year period, the loan would therefore not be longer than the 4 remaining years. So to begin to try to make sense of this, first one has to find a “Bible Lender,” I.e., a Christian (local) bank that adheres to this Biblical Principle. Does such a lender even exist in any capitalistic society?!? Furthermore, even if it does exist, it will logically not give the average borrower, i.e., $52,300 total household income, an, e.g., $160,000 mortgage loan with a 4-year repayment period. Any loan that such a bank would give within this strict time period would certainly not exceed what the borrower can actually repay, or else they’ll certainly be quickly out of business by having written too many bad loans. And who would trust this bank with their deposits. 
            Also, to indeed be applied here, the lender must also defaultly and mandatorily include a clause that the debt will be fully forgiven if it cannot repaid within the 7 years!?! Sure... This will never exist in this world’s predominantly, capitalistic economic system. These principles are not even used for in-house, tuition debts at SDA Educational Institutions.
            So while Reid has realized and corrected his previous mistake, he has not done anything to show how his previously taught theory should still be concretely practicable in today’s society. This is all like giving a car that needs a new engine a fresh coat of pain, and then claiming that it now works just fine!?!
            Tellingly enough, the example that Reid uses for a mortgage repayment is, even though he says that it has been recently reprinted, a $60,000 mortgage!?! (Seminar #5 50:45ff). Assuming that one gave 20% as a down payment, a $60,000 mortgage means that the home would cost an incredibly low $75,000. Those are late 1980's figures. Today that is normally, absolutely unheard of, except in special situations such as foreclosed home auctions and resales.

Another Pointless Correction/Harmonization Attempt
            In this mid-January 2010 presentation [41:11-43:20][1] Ed Reid here, and evidently, after having read, and/or been made aware, of this blog post, again, and even more resolutely, tries to make Deut 15:1, 2 be reflective, supportive and functional of/in a present-day Capitalistic context. This time he emphatically stresses, in a psychologically reversing, hypocritical attitude of “you-probably-misunderstood-this-passage” (as he did before), that it is ‘the creditor (and not the borrower) who is to release the debt here.’[2] He then again attempts to make this passage fit a present day scenario, however this time he confusingly, mindlessly ‘mixes his metaphors’, as if the two situations at issue are so synonymous, as tries to makes his still patent, but now edited, “lending example” simultaneously be: a present day scenario and also ‘one back in the Bible times’ where, still here trying to follow his meandering reasoning, apparently there were people engaged in commercial banking in Bible times, who also had “the highest buildings in town,” as bank/bankers do today, because they were such smart lenders’ and would surely not lend someone money that would take e.g., 6 years to repay, when there were 4 years left in a 7 remittance time period?!? Really, no matter which way you try to untwist Reid’s metaphors here they actually do not apply to either age. E.g., bankers today can’t be said to be “smart” because of a shrewd lending in a non-existent 7-year terminative repayment period; Ancient Israel did not engage in commercial lending/banking, especially as interest was not collected on loans among Israelites (Exo 22:25; Lev 25:35-37; Deut 23:19; Ezek. 18:8, 13, 17; 22:12; Psa 15:5); the year of release did not extend to foreigners, etc. So if anyone lent money to another Israelite, it was strictly out of desire to help them out, and not out of any personal, pecuniary or commercial interest.
            Furthermore with Israel equivalently distributing its common, national wealth amongst itself (See Num 26:52-56, cf. 34:13-29), lending was done to help someone in extreme need and therefore was a matter of last, emergency resort. By this equal and fair wealth distribution and by the laws of inheritance, no one in Israel was inherently poor (cf. Deut 15:4-6ff). Some only came to be poor, in the case of a sickness or a death of the main provider of a household (cf. 1 Kgs 17:8-16). It was then that others freely lent money to them to help them out of this vital bind, and the fact that this was to be remitted after 7 years showed that this was meant to keep no one in a state of perpetual debt because of such entrenched, poverty-inducing, life misfortune. So it definitely was not a normalized, commercial matter as Reid makes it seem by a comparison with Capitalistic banking today.[3]
            It also seems to me that the limiting of amount lent according to the supposed remaining years in 7-year cycle was actually a non-issue, and also contrary to the spirit of that law as clearly stipulated in Deut 15:7-11. Because lending was indeed to be done out of true-needs basis, and not, e.g., to go on a vacation in Dubai, (or was it Cyprus back then), then whatever money was needed to meet someone’s actual vital emergency was to be done regardless of what year of the cycle it was in. Such a greedy attitude, inherently characteristic of the capitalist today, is categorically condemned in this law as “base thinking.” (vs. 9). Evidently Ed Reid did not read, or take into consideration, this part of the passage in preparing/stating his ‘supposed-to-be-godly’ principles, which effectively/Biblically is only such condemned “base thinking.” As they also say, ‘a text without its context, is truly/only a pretext!’ As with capitalism as a whole, one man’s reveredly supposed “smart banking”, is actually God’s abomination.[4]

SDA’s & Capitalism 
            This statement is not only typical of Ed Reid non-sequitur financial advising, which could be summarize in two phrases, namely: (1) live within your means and (2) pay your debts as fast as possible, (How Obvious!); but this statement is also the prefect example of the typical SDA’s skirting of the issue in regards to the actual Biblical mandate for having a Christian Economy. These advices are all here misconstrued by him and others to be applied and implemented within a capitalistic economy. However the clear fact is that God gave all of these stipulations to His People who would be operating in a Biblical, non-capitalistic, needs-based, economy. But an (American) SDA will never uphold or preach this for it is “anathema” to preach against Capitalism. (See e.g., this discussion on this topic in a SDA Forum). Can’t bite the hand that (literally) feed you. Well then, good luck keeping on trying to make a ‘square peg fit in a round hole’! As they say, such futile, obstinate repetitive actions is the textbook definition of insanity! Not a desired trait for a supposed believer in, and follower of, Christ and the Bible. 
            And of course, according to Reid, the Church should keep on investing money into adding annexes and grand entrances to their local Church (such as the side entrance at Sligo Church), ‘for it is very important to look good’; as opposed to using these millions of dollars to do good in the world for those in vital humanitarian need. Talk about wanting to have ‘a fig tree with nice leaves.’ (Mark 11:11-14, 20, 21 - DA Chapter 64). How contrary to the letter and spirit of the message and commission of Jesus Christ. As the Spirit of Prophecy says in speaking on the imperative of Christ in Matt 25:31-46 to people who claim to believe in Him:
"To the rich, God has given wealth that they may relieve and comfort His suffering children; but too often they are indifferent to the wants of others. They feel themselves superior to their poor brethren. They do not put themselves in the poor man’s place. They do not understand the temptations and struggles of the poor, and mercy dies out of their hearts. In costly dwellings and splendid churches, the rich shut themselves away from the poor; the means that God has given to bless the needy is spent in pampering pride and selfishness." (DA 639)

            In order to avoid to sounding so unChristlike and unBiblical in the future, SDA preachers will just have to preach the undiluted and non-compromising Biblical Truth on this topic of ‘The Inherent Evil of Capitalism.’ That will be the day!

[1] At the Advent Hope Sabbath School in Loma Linda, CA which, included a talk, interestingly enough entitled “Satan’s Plan For Your Money” which, if he looked a little closer, and through the light of the Bible, the SOP and the Church’s humanitarian mandate, would see that it actually is to, like a bound-slave, ‘keep on deferentially paying its spurious and whimsical capitalistic prices.’ (See in Note #3 below)

[2] Thanks for the emphasis, but we, or at least, I, can read. In all logical probability, it may only have been Ed Reid who has misunderstood that clear, and explicitly stated, stipulation.

[3] Indeed to rationalize, as Ed Reid evidently has, that today’s bankers are “smart’ because ‘they do not give 7-year worth loans, with e.g., 4 repayment years left’ is just as fantasaical as arguing that: ‘because elephants are so big and cumbersome, it would be safe if they were preventively fitted with helmets when they fly.’ Sure a helmet is a great safety gear... but elephants don’t fly! In the same non-sequitur, correspondence, today’s bankers are not here “smart” because they simply do not have, nor use, a 7-year, diminishing, loan repayment period. In fact, when they are limited by time, such as in 30 or 40 -year mortgage periods, they just increase one’s monthly payments!

[4] Ed Reid evidently seems to find an underlying justification/sanction for his non-critical, effective, support/endorsement of Capitalism, resorting instead to giving tips and tricks to cope with/survive in, it, on the fact that he, self-professedly, was effectively, able to achieve the “American Dream” (college education, own your home, car, etc), including ‘putting his two kids through college without student loans,’ all coming from a "relatively poor" background. That somehow convinces him that Capitalism is a neutral economic system that needs not to be condemned and can actually be successfully overcome if one knows these various debt-paying tips and tricks. Notwithstanding the fact that Capitalism is solely interested in profiting in any way, on others, and that at any cost, which leads to all of the economic injustices in the world, and results in what is rightly denounced by people with any shred of an unseared human conscience as “stupid poverty and senseless suffering and deaths”, one could personally not pay me enough, to even begin to endorse this utterly godless and morally bankrupt (pun intended) system. I have personally witnessed 5 out of 6 independent mortgages (i.e., no “2nd mortgages involved”) over now 33 years for a cumulative total of $255,000 (ca. $410,000 in present dollars [U.S. BLS calculator]) be completely paid off, and each in less than 7 years (a 5.5 year average); and with the only non-paid off home/mortgage still providing a substantial equity when sold, -which provided for 73% of the payment for the “empty-nest”, retirement community condo they were then seeking, -which in turn, when sold, after my mother was told, in no uncertain depictions and terms, in a dream to ‘no accept the offer of a prospective, work friend, buyer then, but instead hold’ and that ‘this home’s proceeds will work like their first home’s’, (=EW 57.1) which it indeed did go on to do when it later sold for twice that first offer’s price, (and also +3X its purchase price, [-in just 4 years]), and thus provided for 80% of the payment of their (present), new construction, (relatively) ‘out of the cities’, home. Moreover, all of this was done on a 40% of potential income over these years (i.e., with one or both household income earners being unemployed, voluntary ‘stay-at-home-parenting’ and/or in school 60% of this time); and with 3 of these paid-off homes (having a current combined value of over $615,000 in their local markets), still in full possession, and for nuclear family (2 children) use. [Talk about Reid’s (rightly understood) “immediate lifetime (at adulthood) inheritance” - [22:35ff] -which was indeed the ‘subsistence and property share’ inherently involved in God’s Israel (Num 26:2, 52-56; cf. Pro 13:22a), for owning a mortgage free home is many times, on various levels, much more valuable than having had your college education paid - i.e., in terms of: monetary costs/value, facility of loan procurement, repayment terms & interest, involved financial hardship risks, assured tangible asset, future value, relative peace of mind and freedom, etc.] All this to say that, if anyone should be defending adamantly Capitalism, it should be me. That is if I was using the short-sighted, self-centered, and moronic, ‘if I’m okay, then everything is, or can be, okay’ capitalistic dogma. Indeed, while some people can survive/thrive despite this system, the vast majority of the world is vitally suffering because this economic scheme is pervasively enforced by the relative few who can and have greatly gained and profited from it. However it is the utter whimsical subjectivity and spurious of Capitalism that was actually still seen in this real estate accomplishment that has instead convinced me otherwise because, true Capitalism actually had very little to do with it. In this experience, I have concretely seen and understood that the fact that here that the mortgages on 5 of 6 homes could be entirely paid off at 40% of potential income, was all solely due to the value of a modest, so called “starter house” (netly) tripling in less than 10 years by several key home improvement being made to it over this time and with them either being absolutely free in term of service costs as purely “do-it-yourself” endeavors, and/or way below market-value prices. Still the value of that home quite disproportionately, considerably increased with each such free improvement, starting with the one that literally got this do-it-yourself|home-improvement ball rolling in the getting together, in 1976, of Church brothers (including the then Speaker/Director of the local It Is Written [French]) one Sunday to volunteer their manpower and/or architectural knowledge/skills to help build an upstair master bedroom. A tasks that, by the considerable amount of potent collaboration, was actually completed in that one day. [See in pages 167208-209 & 297 of the referenced PDF document for this post for pertinent photos (i.e., first 3 houses (and current one), and first house initial major DIY work.]
            Such non-market priced work greatly added to the home’s value, and eventually allowed, when sold, for a 67% down payment on the second, then 11-year old, now, still owned, house, (which has since, long ago more than repaid itself entirely during its first 10 years of 13 as a rental house or unit), whose remaining mortgage was paid off in 3 years, on one income.
            Of all the expense that one can make in their lifetime, the purchase of a home is indeed the most significant one, for one really cannot afford in any way to be homeless. One can go without a car, or even a brand new car, especially when living a city, however a home is virtually indispensable. And it is because of this indispensability that (a) home prices are bought and sold a such inflated/elevated prices, (i.e., when compared with the actual value of raw materials used in their construction), and (b) why mortgage lenders arbitrarily impose compounding interest on their home loan, i.e., simply because you will pay this price. Furthermore, such high home pricing is entrenched in society because virtually anyone can command these prices at their personal profit whenever it is that they control such “capital.”
            Indeed wherever and whenever Capitalism can corner someone and force them to pay its prices, it surely will. How anyone, especially an SDA Minister, can not openly and unequivocally not condemn such a ruthless system, operating under a guise of ‘true freedom’, back to the Satanic boardroom were it no doubt was drawn up, is beyond me, a system that ultimately literally kills, though with bloodless hands, for that ever elusive, satisfactory profit.
            Ed Reid’s attainment of the “American Dream” by being respectful and obedient to this system’s rules of the game may have ingrain him to not dare actually oppose it. However my witnessing and still profiting of also achieving this American Dream, but solely through socialistic means; means which have a concrete basis in Biblical principles and Godly ideals have, quite to the contrary, ingrained me to oppose Capitalism and the senseless damage that it causes/does, at any cost and for however long it will take. (See this major project)
            (And it must be added here that Capitalism/(Capitalists) thinks that whatever it does, or incorporates in now either baptized Capitalism or inherent capitalistic principles. In this vein, the ability now for one to declare bankruptcy once every seven year (which was actually influenced by the Biblical law in Deut 15), and have all of their prior debts wiped out while still being able to maintain a current level of living, is now supposedly pure Capitalism. Well it is not. Such debt pardoning, and that at the full loss of a creditor, but which is actually still covered in the interest that was and will be collected from other borrowers who can afford to pay their debt, (i.e., the creditor, if he makes enough viable loans, would only lose from his overall, interest-incurred profits and not from his lending principle), is ultimately pure Socialism. Indeed True Capitalism, i.e., Laissex-faire Capitalism would not exist without having been so diluted, by purely socialistic principles, into its present form of being a Mixed-Economy. Do take that undisputable fact into full consideration before you think to sing the any praise to Capitalism.)

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