Seattle Moves To Make Available “Sharia Mortgages” To Conform Mortgages To Islamic Law

262px-Flag_of_Seattle.svgIn a controversial move, Seattle is pushing to establish new financing packages that conform with Sharia law to allow greater homeownership among Muslims. Islam prohibits the payment of interest and some Muslims are therefore unable to buy homes under standard mortgage agreements. The most for more inclusive options has led to a backlash by critics who charge that it could be a new avenue for terrorist financing or constitute special treatment for one religion.

This is not the first time that this controversy has arisen. In 2008, Rep. Frank Wolf, R-Va., and then-Rep. Sue Myrick, R-N.C., sent AIG then-Chairman Edward Liddy a letter condemning the company’s move to offer Sharia-compliant insurance programs:

“You may defend your decision to offer Sharia products and will probably state that they have no real ties to Sharia law, and therefore pose no threat. You are wrong. Like Britain, the way to America’s legal code is through its wallet, and if Sharia law gains a strong footing in the United States, it will be through Sharia finance and Sharia products.”

There was even a lawsuit brought by The Thomas More Law Center against then-Treasury Secretary Henry Paulson and the Federal Reserve in 2008 over AIG’s actions. It was an extremely weak lawsuit that predictably failed.

I fail to see the serious threat of terrorist financing or operations due to the availability of Sharia-compliant mortgages. Indeed, I am surprised that the market did not already move to accommodate such demands from customers. Likewise, I would expect to see different types of packages offered as an accommodation for different religious values.

What I find fascinating is the rather artificial way of avoiding the Sharia prohibition that seems entirely acceptable by the Islamic community. All the banks do is take the interest and add that figure to the cost of the loan as “profit.” Thus the bank holds the property until payment of an agreed-upon price that includes “profit.” The sale price is made in installments with the monthly rate set . . . you guessed it . . . on the projected interest rates. Despite the transparent use of interest under another name, that seems to satisfy Sharia law.

As always, my inclination is to leave such matters to the market. So long as there is no discrimination or favoritism given on rates or “profits”, I fail to see the basis for governmental intervention to stop it.

What do you think?

111 thoughts on “Seattle Moves To Make Available “Sharia Mortgages” To Conform Mortgages To Islamic Law”

  1. Prof. Turley, while I highly value your legal opinions, you should not interpose in commercial matters. It could cost your credibility.

    Further, my Italian forebears were not offered any special banking privileges since they began arriving in the 1880-90’s. Isn’t Sharia-compliant mortgages offering special treatment to 0.07% of the bodies that fill our shores? When does a government cross that church-state boundary, if special lending laws relate to a particular religious group. No one says that Muslims shouldn’t accept their homeland values, but you Professor, but there are Sharia products across our land. These funds doubled between 2005 and 2007, and they are made for Sharia-compliant lending purposes. Bening over for new immigrants may be seen as helpful to some, but it empowers Muslims above all others in the financial world. This is something already available in the market and government should stand well back of that muzzle.

    But, then again, Obama has marginalized the USA all around the world. Now Minneapolis has “no-go zones” for cops, because “they police themselves.” Hello, besides religious preference to Muslims, where is the justification for government involving itself in the mortgage business.

  2. Geez. Even the pledge for pluralism is vapid nonsense.

  3. My first response was tongue & cheek. I can’t understand why just because of a religious belief one can not get a mortgage. I thought these things were illegal.

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