Ultimately, a usury contract involves one party charging another party an illegally high interest rate on borrowed money. So, if you avoid accidentally creating a usury contract, you need to consider the laws of the land and make sure you do things according to the book. A non-recourse loan is secured by the value of the debtor`s assets (usually real estate). However, unlike other loans that require the debtor to repay the amount borrowed, a non-recourse loan is fully satisfied by transferring the property to the creditor alone, even if the property has lost value and is worth less than the amount borrowed. If such a loan is created, the creditor bears the risk that the asset will lose a lot of value (in this case, the creditor will be reimbursed with real estate with a value lower than the amount borrowed), and the debtor does not bear the risk of depreciation of the property (because the debtor is guaranteed the right to use the asset, whatever the value, to pay off the debt.) If you are making a loan in the United States, you can easily check the applicable laws and regulations of your state on this site. Some members of Congress have tried to create a federal usury law that would limit the maximum interest rate allowed, but the measures have not progressed. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law by President Obama. The law provides for the creation of a Consumer Financial Protection Bureau to regulate certain lending practices, but has no interest rate limit. [75] Almost everywhere, the crime of usury is so entrenched that many, omitting other enterprises, practice usury as if it were permitted, and in no way observe as it is forbidden in the Old and New Testaments. We therefore declare that notorious usurers should not be admitted to altar communion or receive Christian burial if they die in this sin.
Those who receive or bury them in a Christian manner must be compelled to return what they have received and suspend them from the exercise of their ministry until they have given satisfaction to the judgment of their own bishop. (Canon 25) [42] [emphasis added] The papal prohibition of usury in the 18th century meant that it was a sin to charge interest on a monetary loan. As Thomas Aquinas pointed out in the 13th century, because money was invented to be an intermediary in exchange for goods, it is unfair to charge someone a fee after giving them money. Indeed, the transfer of ownership implies the right to use this property for its purposes: “Therefore, if a man wanted to sell wine separately from the use of wine, he would sell the same twice, or he would sell what does not exist, which is why he would obviously commit a sin of injustice.” [35] In 1980, Congress passed the Deposit-Taking Institutions Deregulation and Monetary Control Act. Among the provisions of the law are that state-chartered savings banks, installment plan sellers, and chartered credit companies have been exempted from state usury limits. Combined with the Marquette decision, which applied to national banks, this effectively overrode all state and local usury laws. [68] [73] The Truth in Lending Act of 1968 does not regulate interest rates, with the exception of certain mortgages, but requires uniform or standardized disclosure of costs and fees. [74] The international growth of the Internet has enabled both microcredit for businesses through websites such as Kickstarter and through global microcredit charities, where lenders provide small amounts of money on interest-free terms. For example, people who lend money to the online charity Kiva do not receive interest,[78] although the end users to whom the loans are made may be charged interest by Kiva`s partners in the country where the loan is used. [79] In such a situation, Parliament must decide whether to prohibit interest or permit usury; between restricting speculation and allowing deletion. The medieval legislator opted for the first alternative.
Church and state have jointly enacted a series of laws to curb the presumption of interest, laws that, like children`s clothing, are not to be despised as absurd restrictions simply because they are not applicable now and would not correspond to the modern growth of nations. On that day, the state repealed these laws and the Church officially signaled that it no longer insisted on them. Nevertheless, he dogmatically asserts that there is such a sin as usury and what it is as defined in the Fifth Lateran Council. [57] Exceptions are another feature to watch out for, as credit card loans may not be bound by usury laws. For example, in California, the maximum interest rate is set at 10%, but the law states that banks and similar institutions are exempt. This is also the case in Florida, Minnesota and New Jersey, among others. (Canon 17). [40] Thomas Aquinas, the leading scholastic theologian of the Roman Catholic Church, argued that the charging of interest was erroneous because it was a “double burden” charged for both the thing and the use of the thing.
Thomas Aquinas said it would be morally reprehensible, just like selling a bottle of wine, being charged for the bottle of wine, and then being charged for the person who uses the wine to drink it. [46] Similarly, no fee can be charged for a piece of cake or for eating the piece of cake. But that`s what Thomas Aquinas did. Money is a medium of exchange and is consumed when it is spent. Therefore, calculating for money and for its use (through spending) means calculating money twice. It is also selling time, since the usurer charges for the time when the money is in the hands of the borrower. However, time is not a commodity that everyone can ask for. In condemning usury, Thomas was strongly influenced by Aristotle`s recently rediscovered philosophical writings and his desire to equate Greek philosophy with Christian theology.
