The housing crisis and the economic mess that followed have led to an interesting, but ethically suspect financial opportunity. Many homes are now on the market at deeply discounted prices, either because they have been foreclosed on or because their owners are simply trying to get out from under a massive mortgage payment. Either way, the opportunity is there for the savvy investor to purchase a valuable commodity priced well below its actual (or potential) value. Economically, this makes a lot of sense. Ethically, there is cause for concern.
What specifically is the worry? These homes are available because, at the risk of oversimplification, something bad has happened to their owners. Thus, investors have the opportunity to turn someone else’s misfortune into a benefit for themselves. In other contexts, we might question this action. For example, knowingly purchasing stolen property at a lower price than one would otherwise pay is a case of benefitting from someone else’s misfortune, and we generally disapprove of this action. In evaluating the ethical acceptability of purchasing foreclosed homes, we might examine this example and try to determine precisely what wrong is being committed.
In the case of buying stolen goods, there are two possible explanations for what wrong is being committed. First, one might argue that we are further victimizing the victim. The person whose property was taken has already been harmed by the theft, and purchasing this property further harms them, perhaps by making their property more difficult to recover. This is a likely reply that many people might give in explaining the harm of purchasing stolen property, and although it has potential, it requires further explanation in order to get to the heart of the matter.
When we buy property that we know is stolen, we are using people as a means to our end. In other words, we are failing to take their suffering into account. Buying stolen property fails to demonstrate appropriate respect for other persons. Though indirectly, it involves using the victim of theft as a means to our end. It is right to identify this as a further victimization of the victim, but we need to be clear about precisely what the harm is that we are committing when we do this. Buying stolen property is a lack of respect for persons.
If the harm of buying stolen property is a failure to show proper respect for persons, we are now in a better position to evaluate the question of whether purchasing foreclosure homes is ethically suspect. This is a tricky question. On the one hand, we are clearly using this business opportunity as a means to our end, and there isn’t a sense in which we are showing respect for those who have lost their homes. There is thus a plausible deontological argument against purchasing foreclosure homes on the grounds that it requires us to violate our duty to respect other persons.
On the other hand, there is a relevant disanalogy between purchasing stolen goods and purchasing foreclosure homes. Stolen goods involve the actions of a third party who directly victimizes another person. It is often through no fault of their own that people are robbed; they might simply be in the wrong place at the wrong time. Foreclosures are not like this. There is no third-party involvement, and in many cases the owner is directly responsible for having their home foreclosed upon. Buying stolen property is a victimizing of the victim, but buying a foreclosure home is simply taking advantage of someone else’s mistake.
It’s not clear from this early analysis whether buying a foreclosure home is the moral equivalent of buying stolen goods. If it is, we are guilty of using persons as a means to our end when we buy deeply discounted homes. But if it isn’t, we are merely shrewd businesspersons capitalizing on the mistakes of others. I will not attempt to provide an answer here, but rather close with a question. If someone else’s error makes them susceptible to being used as a means to our end, does their mistake negate or weaken the generally immoral nature of this action? Once we answer that question, the issue of whether it’s ethical to purchase foreclosure homes falls easily into place.
About the Author
Elijah Weber is a graduate student at Bowling Green State University. He holds a Master's degree in philosophy from Colorado State University, and Bachelor’s degrees in sociology and philosophy from Chapman University. He currently lives in Ann Arbor, Michigan with his wife Laura, his son Brandon, and two cats.