Do you know the three essential rules of real estate? Can you name all three? Well, the answer you’re probably thinking of is that most famous of all real estate axioms: Location, location and location! But with the big ugly mortgage lending and housing foreclosure mess continuing to drive so many homeowners to the brink of financial ruin, I’m proposing a new and better answer: Integrity, integrity and integrity!
You’ve no doubt heard terms like “subprime lending” and “teaser rates” and “no doc loans” and “real estate bubble” used as easy catch phrases to explain what went wrong in our real estate markets. And certainly, banks and other lenders loaning money to people with poor credit histories (subprime lending), or allowing borrowers with limited incomes to believe they could afford large mortgages through confusing adjustable interest rates (teaser rates), or not even checking borrower’s incomes (no doc loans), or accepting appraisal values for homes that were higher than the market could realistically continue to bear (real estate bubble), all contributed to the real estate meltdown. But is that really what’s at the root of the problem?
As an attorney, I’ve handled thousands of real estate transactions over my 20-year career, interacting closely with buyers, sellers, lenders, realtors and other real estate professionals. And from my observations, the real heart of the problem is something much deeper than the current real estate crisis. In fact, our current housing market trouble is only a symptom of the chronic underlying condition.
The real root cause of this whole real estate mess is dishonesty. Plain and simple. Too many people are approaching real estate transactions without the basic Christian value of integrity. Too many people are willing to fudge a number here, exaggerate a promise there, hide something, ignore something, lie about something. And, in the end, it all catches up with them (and everyone else who depended on them). When real estate markets are built on weak foundations riddled with deceptions, it’s no wonder the entire house eventually collapses!
Even in the high-pressure atmosphere of buying and selling real estate, followers of Christ are called to a higher standard. In Matthew 5:37, Jesus states the rules for personal integrity so clearly: “Simply let your 'Yes' be 'Yes,' and your 'No,' 'No'; anything beyond this comes from the evil one.” (NIV) His point may be obvious, but the impact is profound. And it means that even if others around us are not conducting themselves with integrity, our standard doesn’t change. We must be honest.
Imagine what would happen if real estate mortgage loan officers simply told unqualified borrowers “Sorry, you don’t qualify. You’ll have to get your financial house in order first. Come back and see us again when you do.” Would we ever have another episode as ridiculous and unnecessarily painful for our entire economy as the subprime lending crisis?
Imagine what would happen if lending institutions properly warned their customers “Do you realize how high your payments are going to be when this adjustable rate mortgage kicks in? You might not be able to afford to keep the house you’re buying. You should really think twice before taking this loan.” Would so many tragic foreclosures be happening in our communities?
Imagine what would happen if borrowers being offered “no doc” home mortgage loans didn’t overstate their income or understate their obligations by even a nickel! Would they be facing such an impossible challenge in paying their mortgages each month? Or imagine what would happen if every real estate appraiser carefully and realistically assessed the value of the properties being appraised without regard to whether the appraised price would be high enough to make the deal fly. Would so many people be stuck trying to sell homes burdened with mortgage balances higher than their actual market value?
Is it unrealistic to expect that everyone involved in every real estate transaction should conduct himself or herself with absolute integrity? Probably. After all, why should those who don’t believe God is who He says He is concern themselves with abiding by His standards? But, on the other hand, is it realistic to expect that we, as Christians, should strive to conduct ourselves with integrity in all our dealings, even real estate dealings? Absolutely yes! Jesus would not have told us to do something He thought was impossible for us! And in doing so, we will make it that much harder for those around us to get away with cheating either!
So here’s the challenge. For those, like me, who regularly participate in real estate transactions as advisors, are we willing to stand up as Christians and speak words of truth, even if it means the deal we’re working so hard to close might not happen? And for those buying, are we willing to be truthful and transparent about every detail of our finances, even if it means we don’t get the dream house we want so badly? And for those selling, are we willing to be totally honest and upfront even if it means we won’t make as much money on the sale as we had hoped? If we can answer “yes” to those questions, if we can make the number one rule “integrity, integrity, integrity,” then we are honoring Christ and solving the real problem in real estate.
*This column contains generalized information only and is not intended as a substitute for the specific legal advice of your own attorney.
Stephen L. Bloom is a Christian lawyer serving clients throughout Pennsylvania. He wrote The Believer's Guide to Legal Issues (Living Ink Books) and frequently speaks on Christianity and law. For information, visit his website http://www.istherealawyerinthechurch.com
Article reprinted from Stephen Bloom's Good News Daily column titled "Good News on the Law." Visit Good News Daily's website at http://www.goodnewsdaily.net/