Saturday, August 06, 2005

Buying a house? Get an Islamic loan!

According to this article in the Detroit Free Press, some banks have found a way to accommodate the religious beliefs of American Muslims. Here's the deal:

When Shereen Solaiman and her husband, Brandon Metzger, bought a home in Ypsilanti eight years ago, they had to make a difficult compromise.

Solaiman, who was born into Islam, and Metzger, who embraced the religion 13 years ago, took out a conventional mortgage that charged interest.

By many interpretations, Koranic law forbids the payment or receipt of interest on the theory it creates a culture of debt slavery, which begets other evils.

But when Soliaman and Metzger moved to Canton earlier this year, they found a new way to finance their house that didn't compromise their principles.

They obtained an Islamic mortgage that was in Sharia -- or compliance with Islamic law. In Islamic mortgages, an intermediary such as a bank buys the property, and the homeowner eventually obtains the home through a lease-to-own arrangement.

Stephen Ranzini, the president of University Bank President, said his bank has handed out more than 50 of these Islamic mortgages. Those loans totall a little more than $11 million. However, he also admits that the "we had to retool our systems and communications. We spent a lot of time with banking regulators to educate them about this. We had to get legal opinions ... It's considered pretty radical. It's expensive and time-consuming but ultimately, if it's the right thing to do, it's the right thing to do."

1 comment:

nitin singh said...

Thank you for sharing this information. It has helped me to know more about
home financing options