A borrower who came to repay the lender via a messenger, as soon as he gives the money to the messenger’s hand/domain, the messenger acquires the money on behalf of the lender. And if the borrower refrets and wants to take the money [back] from the messenger’s hand and pay him [the lender] later, it is prohibited because he would have it without the knowledge [of the owner]. Also, the messenger may not return them [the monies] to the borrower.
Someone who lends his friend money on a collateral such that if he does not pay it in a certain time, the collateral would b, he should be careful to tell him at the time of the lending “If you do not pay it off until such-and-such a time, it should be transferred to my possession as of now.”
Someone who know he is obligated to his friend [borrowed money or objects] and his friend says to him, “It is certain to me that you do not owe me”, he is not obligated to pay him, since the lender forgave him [the loan].
Just as one has to be careful in guarding something you were charged with, all the more so one must be careful in guarding collateral, because he is like a paid guardian [one of the four categories of guardian discussed in the gemara] for the collateral. Just as someone appointed [to guard] can not give someone else the item for them to guard (as will be explained in chapter 188) so too the lender can not give the collateral to another’s domain to appoint them [as guardian] or use it as [his own collateral] without the knowledge of the owners.
The lender is like a paid guard, whether because he gets a benefit by holding onto the collateral; it mitigates his risk of non-payment or because the loan is a mitzvah, and thus the guarding is being “paid for” with that reward. See Bava Metzi’ah 81b-82b.
We discussed numerous laws against obtaining benefit from a borrower because of a loan, since it would be a form of non-fiscal interest. And yet, even though this risk mitigation is here given implied monetary value, this reasoning does not prohibit receiving collateral. I do not have an explanation.
Someone who has a debt contract [i.e. an IOU] on his friend, and the contract is fading and heading toward erasure, he should go to court and they will make him a permanent one.
It is prohibited to leave a paid off [IOU] contract in one’s house, as it says “[If sin dwells in your hand, put it away] and do not give home to unrighteousness in your home.” (Job 11:14)
Note that the sin in se’if 11 isn’t that of theft, of using the contract. Just having the temptation around, or the possible chance of error (e.g. if the former lender dies and his heirs try to collect) is itself prohibited.
If the lender wants to take collateral not at the time of lending, but later than that, he should not do so except as instructed by a court.
A person should always distance himself from cosigning and from collateral as much as possible.
This latter se’if is not intuitive. The basic idea is that it is better to operate on trust, even though here we mean trust in a third party, the witnesses on the contract recommended back in se’if 3. In that se’if he tells the lender not to just loan without evidence, since that is too tempting of a scenario, but to instead use a collateral or even better, a contract. Here we see collateral being described as the inferior choice in stronger terms.
This notion that lending should be about trust ties back to my recurring theme when we discussed interest. I argued that interest wasn’t immoral; because if it were, accepting it from a non-Jew would also be prohibited. Instead, it’s unbrotherly to charge another Jew interest. And in fact, the verse describes the borrower as “akhikha” (your brother) in that prohibition. The notion that lending money reflects the fraternal bond of all Jews would also explain the prioritization here.
Someone who lends on a collateral must be careful not to use it, because that would be like taking interest. But if he is lending to someone poor on [a collateral] of a whip or an axe, which has a high rental and is only a small risk of loss, he can rent it out even without asking the borrower, deducting the rental fee from the amount of the debt — for this is certainly of benefit to the borrower. There are those who say that it can only be rented out specifically to others, but not to himself, so that they do not suspect him of using it for free, just in exchange for the loan [as that would be prohibited as interest].
The borrower is prohbiited from taking the loan out for no need to the extent that it could get lost and the lender would find nothing from which to collect, even if the borrower is very wealthy. And whomever does so is called a “wicked person”, as it says, “The wicked borrow and do not pay, but the righteous deal graciously, and give.”
Our sages commanded, “Let your friend’s money be as dear to you as your own.”
When the lender recognizes the borrower, that he is someone of this attribute that he wouldn’t watch over others’ money, it is better not to lend him than to lend him and have to approach him afterward and violate each time “do not act toward him like a debt carrier” [see above, se'if 4].
It is prohibited to nag the borrower when you know he has nothing to pay with. Even passing before him is prohibited, because he will be embarrassed when he sees the lender and doesn’t have enough on hand to pay him. About this it says, “[If you lend money to My people, to the poor who are with you] do not act toward him like a debt carrier [nor shall you lay interest on him.]” (Shemos 22:23)
Just as the lender is prohibited to nag the borrower, it is also prohibited for the borrower to withhold the friend’s money which he has and say “Go away and come back [later for it]!” when he does have it. As it says “Do not say to your neighbor, ‘Go and come back [and tomorrow I will give]‘ when you have it with you.” (Mishlei 3:28)
Even someone wealthy, if he needs to borrow money, it is a mitzvah to lend to him and give him benefit even with words [such as] giving him advice that is appropriate for him.
It is prohibited to lend money without a witness — even if to a talmid chakham. Except if he lends with collateral. Even more praiseworthy — lending with a contract.
Relying on someone’s trustworthiness is testing their mettle to an extent that it is prohibited. Temptation strikes us all, even the sages among us.
Although, as we saw in the events that led to my launching this series, different people are tempted by different things. Someone might justify their denying a loan for personal gain. Someone else might engage in financial chicanery only if necessary to keep their institution open and rabbeim paid.
We are now skipping ahead to the next siman that discusses fiscal integrity, the discussion of loans without the issue of profit or interest (already discussed in siman 65).
סִימָן קעט – הִלְכוֹת הַלְוָאָה
179: Laws of Lending
There is a mitzvah of comission [mitzvas asei] to lend to the poor of [the People of] Israel. As it says “If you lend money to Ny nation, to the poor who is with you…” And even though it says “if”, our sages (of blessed memory) received [the tradition] that this “if” is not about something permissible, but rather an obligation. This is how they say it in the Mekhilta, “‘If you lend money to my nation’ — obligatory. You might say, “Obligatory? Or perhaps only something permissible, for it says ‘if’? Therefore it says ‘a loan you shall lend him’ — obligation, not just permissible. And that which it is written with the language ‘if’, it means, ‘if you lend money, lend it to My nation and not to [someone from] another people. And who among ‘My nation’? The one who is ‘with you’. From here they said, ‘a poor person who is his relative has priority to other poor. And the oor of his city are ahead of the poor of another city.’ The mitzvah of lending to the poor is greater than the mitzvah of charity to the poor who asks, because this one already had to ask, and that one didn’t reach that level yet. And the Torah is particular about someone who withholds from lending to the poor as it says, ‘And your eyes should look to your impoverished brother…’ And someone who lends to a poor person in his time of distress, about him the scripture says, “Then you will cal, and Hashem will answer.’”
The only thing not self-evident about this is the notion that relative comes before neighbor comes before foreigner, and Jew ahead of non-Jew. And even that makes sense, after you read it. See also Rav Shim’on Shkop on “If I am not for me, who will be for me? And if I am for I myself, who would be?” (Introduction to Shaarei Yosher, pg. 4.)