Islamic Banking and Islamic Mortgage Transactions [mortgagegoal.blogspot.com]
From UFANA Conference 2010, Toronto, Canada - March 30 & 31, 2010 Lorne Cutler Founder, LAC & Associates Consulting Stephen Ranzini President & Chairman, University Bank, USA Stephen Lange Ranzini is President of University Bank of Ann Arbor, Michigan which has .2 billion in assets under management. He played the leading role in the acquisition of the Bank in 1988 when he became the nation's youngest bank holding company President at age 23, a position he has held since. Among his accomplishments at University Bank, he is the Founder, Chairman, President & CEO of University Islamic Financial, the first banking subsidiary of a US bank run entirely on Sharia principles. University Bank was selected as "Community Bankers of the Year" in 2006 by US Banker magazine and as "Community Bankers of the Year" in 2009 by the American Bankers Association. A magna cum laude graduate of Phillips Exeter Academy, Stephen graduated fro m Yale on scholarship and has served as both the President of the Yale Alumni Association of Michigan and as a Delegate to the Yale Assembly. Omar Kalair President and CEO, UM Financial, Canada In 2004, Omar Kalair founded UM Financial, which today is Canada's premier Islamic Financial Institution as well as a member of IFSB and AAOIFI. UM operates UM Financial, UM Investment, UM Advisory (Sukuks) and a Islamic Mastercard. UM Financial is also working towards Islamic ETF, Takaful insurance, Canadian bank license and more. UM Financial is a founding member ...
mortgagegoal.blogspot.com Part 1/5 - Islamic Mortgage Financing in the Non-Islamic World
Islamic banking is banking or banking activity that is consistent with the principles of Islamic law (Sharia) and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees (known as Riba) for loans of money. The definition of riba in classical Islamic jurisprudence was "surplus value without counterpart" and that "numerical value was immaterial." Islamic banking and mortgage interest rate is restricted to Islam acceptable transactions, which exclude those involving alcohol, pork, gambling, etc. The aim of this is to engage in only ethical investing, and moral purchasing.
In an Islamic mortgage transaction, instead of loaning the buyer money to purchase the item, a bank might buy the item itself from the seller, and re-sell it to the buyer at a profit, while allowing the buyer to pay the bank in instalments.
However, the bank's profit cannot be made explicit and therefore there are no additional penalties for late payment. In order to protect itself against default, the bank asks for strict collateral. The goods or land is registered to the name of the buyer from the start of the transaction. Some Islamic banks charge for the time value of money, the common economic definition of Interest (Riba). These institutions are criticized in some quarters of the Muslim community for their lack of strict adherence to Sharia.It is true that Muslim mortgage interest rates are priced higher than conventional mortgage products with customers expected to find a higher deposit. Due the nature of the transaction, institutions have added cost implications and certain there is an element that early innovators do see money to be made. In an Islamic mortgage banking home purchase plans are such that the Lease and the sale contract to the purchaser are separate. The general option of Shariah scholars on are, 'It is allowed that instead of a sale the leaser signs a separate promise to gift the leased asset to the lessee at the end of the lease period, subject to his payment at all amounts of rent. The Validity of this depends on two basic conditions. The agreement of Ijarah itself should not be subjected to signing this promise of sale or gift but the promise should be recorded in a separate document. The Promise should be unilateral and binding on the promise only. It shoul d not be a bilateral promise binding on both parties because in this case it will be a full contract affected to a future date, which is not allowed in the case of sale or gift.'
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