BAIS HAVAAD ON THE PARSHA 5772 PARSHAS KI SETZEI PART 2 CHOSHEN MISHPAT CHIDUSH

(PLEASE LEARN THIS FOR THE REFUA SHELAMA OF HaGaon HaRav Yitzchok Zilberstein Shlita-Yitzchok ben Rochel RAV CHAIM KANIEVSKY-Rav Shmaryahu Yosef Chaim ben Pesha Miriam,Rav Shteinman - Aaron Yehuda Leib ben Gitel Feiga, Rav Weiss - Yitzchak Tuvia ben Rikal, Rav Yosef - Yaakov Chai ben Margalit Harav Shlomo Leib Ben Miriam - HaRav Shlomo Brevda Harav Yeshaya Yaakov Ben Raizel - HaRav Yeshaya Yaakov Portugal Harav Meshulem Fish Ben Tziril - The Toshe Rebbe Rav Yerachmiel Shlomo Hakohen ben Raizel. -Rav Yerachmiel Shlomo Rothenberg, rosh yeshiva of Yeshiva of Mountaindale Rav Shaul ben Pasha-Gavaad Zurich, Switzerland and rav of Beis Medrash Agudas Achim for a refuah shleima b’soch kol cholei am Yisrael.)(AND L"N RAV YOSEF SHALOM BEN RAV AVRAHAM(RAV ELYASHIV ZT"L)Paying Another's Mortgage By: Rav Yehonassan Dovid Hool Many parents,at the time of a child's engagement, will commit to provide a particular sum of money that will be used to purchase an apartment for the young couple. Sometimes, a parent may help a young couple by taking out a loan from a bank, and mortgaging the apartment that the couple purchases to this loan, with the parents agreeing to pay off all or some of the mortgage installments. Generally, it is permitted to take a mortgage from a bank that is not Jewish owned, since there is no Halachic prohibition to pay interest to, or receive interest from an Akum. In this case, though, if the property is registered under the child's, or the couple's name, with the parents paying off the mortgage, the arrangement would be Halachically prohibited. There are methods that can be employed in order to avoid this problem, and in order to ensure that this arrangement is carried out in a permitted manner, a Rav or Dayan experienced in these matters should be consulted. In-Depth Analysis The Torah prohibits paying interest to a fellow Jew as well as receiving interest from him. However, one may receive interest from a non-Jew on a loan that was made to him, and one may pay him interest too. (Indeed, if one has committed to paying interest to a non-Jew, one must carry out this commitment. In fact the verse, "Lanochri sashich" (Devorim, 23:21) is interpreted by the Sforno not as permission to take interest from a gentile, but rather as a commandment to be faithful to one's commitment to pay interest to a gentile.[1]) Thus there is no problem with taking a mortgage from a gentile-owned bank, because there is no prohibition against paying a gentile interest. In our case study, though, a problem arises. A father commits himself at the time of his son's engagement to give, say, $100,000 towards the purchase of an apartment. The couple then purchases an apartment, in part via a mortgage of $100,000 from the bank, with the father undertaking to the young couple to pay off the mortgage payments to the bank. However, the apartment is registered under the couple's name, and not the father's, and thus legally it is the young couple who have taken the loan, and it is their apartment that is mortgaged to the bank. In effect, then, what has happened is as follows. The father, as a result of his prior commitment, owes the couple $100,000. The young couple then purchases an apartment under their own name, taking a loan from the bank, and obliging themselves to pay interest payments to the bank, with the overall repayment of principal plus interest coming to, say, $120,000. The father then pays the bank, in installments, the loan, plus the interest, that the couple owes the bank. So in lieu of the father paying off his debt of $100,000 to the young couple, he is actually giving them interest by paying off their debt to the bank of $120,000. That, in effect, is a payment of interest from the father to the child, because since it is the child that owes the money to the bank and not the father, the father's payment of the child's interest obligation to the bank is considered a benefit that the father is granting the child, in exchange for the postponing of the debt of $100,000 that he already owes the child. So the father is paying interest to the child on the debt that he owes him. There is a simple way around this problem, though. Rather than the father committing himself at the outset, at the engagement, to a sum of $100,000, he can commit himself to provide the total sum that the bank will charge in providing a mortgage for $100,000, including the repayment of principal plus interest. Already at the outset, then, the father has not indebted himself to the couple for $100,000, but rather for a total of $120,000 (in our example), and thus by paying the mortgage payments to the bank he is not providing for the couple any more than he had obliged himself at the outset. However, if at the time of the engagement the father obligated himself to a particular sum, and he now finds that he cannot provide this amount without taking a loan from the bank and mortgaging the young couple's apartment, this would be forbidden because as explained the father would be in effect paying interest to his child by paying off the child's mortgage payments to the bank. One possible solution would be to facilitate an Iska between the father and the child. Briefly, the way an Iska works is to structure an obligation not as a loan or debt, but rather as an investment. So if for example, Reuven does not lend money to Shimon but rather invests money with Shimon, then Shimon can pay back Reuven the principal plus additional payments, which are not interest payments on a loan but rather are Reuven's share of the profits of his investment. In our case, then, the father could transfer to the couple an interest in his own assets, in lieu of payment of the debt that he has obligated himself, and then any mortgage payments that he makes on their behalf, will be in lieu of their share of the profits that his own assets are accruing. Now, there may be a concern that the father's assets might actually decrease in value, in which case there would be no justification for making payments to the child (by paying off his mortgage obligations). In order to circumvent this possibility, a Hetter Iska would need to be employed, which structures the nature of the deal between them in such a way that this issue too is avoided. (A full discussion of the way a Hetter Iska works is beyond the scope of this short article.) If the father doesn't actually own any assets, though, then this is not an option. A further possibility is discussed by R' Sariel Rosenberg shlit"a (Kovetz Hayashar Vehatov, VI, page 56), but that too is not suitable for all circumstances. All in all, then, in such a situation a Rav who has expertise in this particular field should be consulted, to determine a Halachic approach for each particular circumstance that will avoid the serious prohibition of paying interest. [1] This is in line with the Gemora (Bava Metzia, 75b) that parses the word "sashich" as the causative tense, and thus "Lo sashich le'ochicho" (Devorim, 23:20) is a prohibition on the borrower to pay interest to the lender.