You learn “through the grapevine” that an elderly woman who has lived on your block for 50 years is in foreclosure.

SCENARIO 1

You learn “through the grapevine” that an elderly woman who has lived on your block for 50 years is in foreclosure. You visit her and learn that she owned the house free and clear until a few years ago when she took out a mortgage to pay for her late husband’s medical bills and funeral. Now that the low “teaser” rate on the loan has adjusted, she can no longer afford to make the payments and she is in default. She is devastated, not because she is losing her home (she is planning to move in with her daughter) but, rather, because she feels that her reputation and good name will be ruined by what is happening to her. She tells you that she owes $40,000 on the loan. You know that the home is worth at least $450,000, so you offer to buy it from her for $60,000 hoping that she doesn’t realize what it is worth (after all, she probably bought it for $5,000). She is overwhelmed and overjoyed by your generosity and quickly accepts your offer. You buy the house and immediately “flip” it for $400,000. Have you acted ethically?