In 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?
Well, if Hobby Lobby and Contestoga can get laws twisted into a pretzel to accommodate their religious belief system, then all’s fair in commerce and profit? No?
That is one step closer to be headings or Sharia Law here in the USA. Send them packing and do not change to the Islamic ISIS Cleric laws. Keep the Separation of Church and State as the US Constitution states. To do otherwise violates the US Charters between the States of the United States.
Paul C Schulte then you should take that up with the Pope. The Catholics are the ones being recommended by their leader to adopt sharia-compatible home loans. I’m just an atheist who finds this huge panic over anything with the word sharia in it highly amusing.
Tony Sidaway – the Pope is a Jesuit first, Pope second. One of the things you learn in the Catholic Church is there are two types of Catholicism, the Jesuits and then everybody else. I thought this Pope was a poor choice given the history of the Jesuits and the Popes. I think this one is overstepping his authority. And I am not the only one. A senior cardinal called him out on the climate change thing the other day. His popularity with American Catholics has dropped significantly lately.
Leave it to the market and allow anyone to select the note if they prefer it. I would expect the Sharia law note be less attractive. Maybe a higher effective interest rate. The issue will come when regulators and politicians require the use of the Sharia note.
Lisa N sharia-compliant mortgages are simply financial instruments. They are drawn up to be both compliant with local law and with Muslim principles. No change in US law is required. On checking, it appears to me that University Bank based in Michigan already offers a full spectrum of Islamic financial services through its subsidiary University Islamic Financial.
A sharia-compliant mortgage does not require charitable donations. That’s the usual Fox News guff.
As well as the method of selling the house for more than the market value and allowing payment by installments, to be sharia-compliant the mortgager must not charge late-payment penalties. The loan is instead usually secured by collateral. The mortgager also buys the property outright at the beginning and retains ownership until it is paid off. So it isn’t just a cosmetic rearrangement of mortgage interest, or not obviously so.
Another sharia-compliant method is to form a partnership in which the borrower buys up the lender’s share over time. This is pretty cool because it allows a variable repayment rate.
These methods are religion-neutral, and indeed the Pope has recommended sharia mortgages as an alternative to methods that are more common in the US, which the Catholic Church has long condemned as usury.
Tony Sidaway – what the banks are charging now is hardly usury. What the banks were charging when Jimmy Carter was President was usury.
The answer is in the details. According to today’s FOX News, the bank will be required to made a charity contribution to a charity organization (I’ll bet a……. Muslim charity !) : are we kidding ??!!
In medieval times some Christian followers believed that making interest-bearing loans were prohibited by some bible interpretations. As a result, the Jewish community was used as an intermediary in the loan making process, i.e., became bankers. I do not believe a purported “sharia-compliant” bank loan requires a bank to accept a religion, but is only a bookkeeping mechanism to permit Muslims to make a loan without stated interest (but of course the bank still makes money on the deal).
This is a private transaction between a bank and a customer (as are traditional mortgages), which apparently does not conflict with existing laws. Thus, the private parties should be able to proceed. However, this is not to say that all aspects of sharia law are consistent with U.S. laws, especially with regard to gender equality. Other ethnic or religious practices also are not consistent, such as traditional Jewish law that requires the husband to consent to a divorce.
During medieval times they used a workaround. It wasn’t called interest, it was called something else.
Do not accommodate those who do not accommodate others. Or others who can not date others. They do not need to buy homes on time without some run around scheme to call interest “not interest”. America is here to raise people out of the dark ages. Give us your tired, your poor, your huddled masses. Not your dumb masses whether cat o lic mass or otherwise. To accommodate Sharia Law is like accommodating Nazi law.
There should be NO mortgages based on any other law, than America’s laws. This is outrageous. They are guest in America and therefore should follow American laws!!!!!
Questions:
Perhaps someone from the UK or one of the Gulf States would know.
What happens when the buyer sells? What amount is paid to the bank?
Can interest deductions be taken on such mortgages? There is no interest, so I doubt it.
Can anyone apply of such a loan? I trust Seattle hasn’t mad the mistake of making these available only to Muslims.
So you scratch out the word interest and write in profit or prophet. What’s the big deal. All religions play with words. Just try and have an intelligent and/or rational conversation with a religious person. The bottom line is always, ‘because it was written’, here, and here, and here, and here…….
My question is can so called Christian loans be made available as well? While I see no legal reason to do this, i DO see a political reason NOT to allow it. I would object to a Christian loan contract as well, since it starts to blur the seperation between religion and state. It is not like halal or koser foods since buying such products does not involve the legal system.
randyjet – I am a little tossed by this issue. I know that living under their religious laws prevents them from paying interest, therefore cutting out several methods of funding. However, at the same time, they choose to live under Shaira law and you take the good with the bad.
SgtSabal perhaps I can, as a British person, turn your question back on you. What do you think has happened in the UK with Sharia law?
Sharia mortgages are new in America? We’ve had them in the UK for a few years now. They’re obviously no more useful for terrorist financing than any other type of account (I can’t even imagine how that would work). And you can’t catch religion from a bank transaction.
They could write Saudi Arabia and ask for the money. Every body else is.
I agree with Justice Holmes, except I would recommend living in a Muslim country. If you can’t abide our laws and our system, go somewhere else. There is no place in America for sharia law, “christian” sharia law or theocracy either, none, nada, zip. Ask British people what has happened in England with sharia law. I know a lot of English expats here in Thailand, the response won’t be very pretty. Thailand does have Muslim banks for the few, but highly visible Muslim, No “ninja outfits” thankfully except those that come from some of the Muslim countries and those are usually seen down in Bangkok.
Sorry, if you want a mortgage compliant with Islamic law you need to live in a theocracy. This is taking inclusion too far. We live or at least I thought we did in a secular society. Legal documents that comply with one religion or another are inappropriate.
Reblogged this on Independent American Communities and commented:
What do you think of “Sharia-compliant” financing for home purchases? This is actually already happening in the UK.
Reblogged this on The Grey Enigma.