The Official AMJA Fatwa on Islamic Home Finance – Guidance Residential, Devon, La Riba, University Islamic and More

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I recently blogged about the AMJA Conference on home financing – this is the official follow up from AMJA regarding the various Islamic institutions in the US.

 

بسم الله الرحمن الرحيم
In the name of Allah, the Compassionate, the Merciful
All praise are due to Allah alone and may the peace and blessings be upon the Messenger of Allah. To proceed:
The AMJA Fiqh Committee Resident Fatwa Committee met in Houston on the 20-22 of Dhul-Qadah 1435 A.H. (September 15-17 2014 C.E.) in order to issue a resolution concerning Islamic Home Financing in the United States. This meeting took place after an entire conference had previously been held on this topic, in which papers were discussed in the presence and with the participation of representatives of most of the relevant companies. This was followed up by correspondence between the Resident Fatwa Committee  Fiqh Committee and those companies with an attempt to clarify and respond to the Shareeah issues that are present in their contracts. Sh. Jamaal Zarabozo (may Allah preserve him) also participated in this meeting in Houston.
After looking into the matter, the Committee Resident Fatwa Committee (RFC) decided upon, according to the majority of its members, the following resolution:

First, the Shareeah fundamentals concerning the companies that deal in Islamic home financing:

Companies that deal with Islamic home financing in the United States may be divided into three categories:
  1. The first group is comprised of those companies whose contracts, in general, are in agreement with the Shareeah. They are assisted by the fact that they are not in need of selling their contracts to the Public government-sponsored enterprises  federal, interest-based organizations [such as Freddie Mac]; this gives them the freedom to design their contracts in a manner in accord with the Shareeah without facing any restrictions from Public government-sponsored enterprises  interest-based financing institutions. At the same time, though, it is noted that the capabilities of these companies are quite limited. They are able to supply houses in the tens [as opposed to the thousands]. Furthermore, their availability is limited to certain states. Thus, they are not truly able to fulfill the needs of the millions of Muslims who reside in America.

    The ruling of the RFC Committee is that it is permissible to deal with and purchase homes from companies of this nature.

  2. The second group is comprised of those companies whose contracts, in general, avoid falling into explicit interest (Ribaa). They do not deal with interest-based loans. Instead, they deal in types of contracts that are permissible in the Shareeah in general, such as Murabahahcost-plus purchase order, Musharakah diminishing partnership and Ijarah rent-to-own. Many of the people who run these companies, we noticed, are anxious to avoid forbidden transactions and have exerted a great deal of effort with their legal advisors to produce legally sound contracts that will allow them to avoid what the Shareeah would consider void contracts. However, their contracts do contain some forbidden components, such as invalid clauses, inequity, undue risk, unknown quantities and the like. Additionally, they need to invoke exemptions allowed by the jurists and resort to an improper mixing of different schools of jurisprudence in order to devise a Shareeah-based way out [of the problem of interest]. In order to meet the large demands of the millions of Muslims residing in America, these companies are in need of selling their contracts to the federal institutions, such as Freddie Mac. These federal, interest-based institutions put a number of restrictions on them that virtually prevent their contracts from being free of these Islamic violations. These violations differ in intensity from one company to another.

    The ruling of the RFC Committee specifically concerning this set of companies is that there is an exemption to buy through them in the case of need or dire need, depending on the different intensities of violations and the fact that need must be dealt with according to its severity.

    We encourage these companies to continue their efforts in developing their contracts in order to bring an end to their shortcomings that the Committee has noted. If someone can find an alternative and not deal with these companies, he will be safe and will be protecting his faith and his honor.

  3. The third group is comprised of companies that still continue to deal in interest-based loans. Their contracts are no more than offshoots of traditional interest-based loans or simply a form of impermissible legal stratagem to get around the prohibition of interest. The ruling of the RFC Committee with respect to these types of companies is that it is not allowed to purchase homes through them. We advise those who are administering these contracts to adjust them and make them proper.
Second, the Committee would like to emphasize that this ruling on this issue is directed towards those who wish to deal with these companies to purchase real estate via their financing and contracts and the ruling holds as long as the contracts are as they are in the present state and the modes of purchase are as they are now. Any change in their contracts or manner of execution would therefore require a change in the ruling.
As for the companies themselves, this ruling is actually in need of more clarification from them concerning their relationship with the Public government-sponsored enterprises federal financing institutions [such as Freddie Mac], a matter concerning which the RFC Committee was not able to receive a detailed clarification.

Third, “need” is that which is desired by an individual or society to make things easier on them and remove constraints. If one is lacking what is determined to be a “need,” then the individuals or the society face hardships and difficulties that go above and beyond the customary efforts required of individuals by the Shareeah. People may differ in estimating those hardships. However, the RFC Fatwa Committee views owning houses to be a general need of the Muslim population in America. As for determining the level of need for specific individuals, this would depend on the availability of a substitute in the form of being able to rent without being caused harm.

Fourth, below is the application of these principles to the Islamic financing companies that are operating throughout the United States:

Guidance Residential: They are based on a diminishing partnership with rent to own ending in ownership model in their relationship to the purchaser. Their contract is sound in general. However, it contains some Shareeah violations with respect to maintenance, taxes and insurance, as these expenses are not distributed in a just manner according to percentage of ownership.
The ruling of the RFC Committee concerning this company is that it is permissible to deal with them in the face of need. The representatives of this company are advised to review those defective portions of their contract.

Ameen Housing: They are based on a diminishing partnership with rent to own ending in ownership model in their relationship to the purchaser. Their contracts are not sold to the federal institutions [such as Freddie Mac]. They also avoid explicit interest in their transactions. However, their contract does contain some Shareeah objections glitches , such as unfairness in the percentage that they discount in the rent to take care of basic maintenance, expenses that be more or less than that discounted amount. Additionally, they have just introduced a late payment fee [which is another violation of Shareeah principles].
The ruling of the RFC Committee is that there is no harm in dealing with this company in case of need, although one should do one’s best to make one’s payments on time in order to avoid the late payment fee. The Committee also encourages the company to abstain from those aspects pointed out by the Committee.

Devon Bank: This company has two types of Islamic contracts:
The first contract is Murabahah a cost-plus purchase. This contract is surrounded by doubts concerning whether the bank truly owns the property before it is readied for sale. In addition, this contract also contains some defective or problematic conditions or aspects of great unfairness, such as with respect to (a) the bank having exclusive benefits from insurance payouts while requiring the purchaser to pay for the insurance, (b) the bank’s right to freeze the purchaser’s account simply on the suspicion that he will not be able to make his payments, (c) the bank’s right to declare the purchaser in default if he does not use the property as a residence or due to his death although heirs have the right to continue the contract after his death, in fact the cost-plus purchase contract states that the heirs are bound by the contract.
The ruling of the Committee is that there is no harm in dealing with this [contract of] this company in the presence of dire need. Whoever remains away from it has kept himself safe and has protected his faith and honor.  The Committee advises the Bank to correct these aspects and to affirm the ownership of the property before selling it and to avoid the other invalid conditions as much as possible.
The second contract is a rent to own contract. This also contains a number of Shareeah violations and invalid conditions, including having two different contracts (sale and lease) at one time, about one item during one time period. Various Fiqh councils have ruled that this model is not permissible as the legal effects of the two types of contracts are contradictory. This may be corrected by separating the two contracts by making them independent of each other time-wise, such that the sale contract is done after the lease contract, which must be a true lease and not something meant to simply hide the sale. Or, they [may replace the sale] with a promise of handing over ownership at the end of the lease.
From among the defective or void stipulations that this contract embodies are the fact that the bank can evict the lessee upon default but the bank still holds him responsible for the rent until they can find a new renter, the fact that the bank does not pay for the basic maintenance of the property and the fact that the lessee is required to pay insurance while the bank retains the right of any payments from the insurance, allowing the bank to benefit while the lessee bears the cost.
The ruling of the Committee is that there is no harm in dealing with this [contract of this] company when one is in a state of dire need. Whoever remains away from it has kept himself safe and has protected his faith and honor. The Committee emphasizes its recommendation to the bank to rectify the current model by separating between the two contracts and avoiding the defective or void stipulations as much as possible.

University Islamic Financial: The same comments concerning their cost-plus model and lease-to-own models as were stated concerning Devon Bank can be repeated here. Thus, their models have the same rulings and the Committee offers them the same advice. There is an exemption to deal with this company only if one is in a state of dire need. Whoever remains away from it has kept himself safe and has protected his faith and honor.

Ijara Loan: This company starts by directing the purchaser to get a standard interest-based [mortgage] loan and then creates a trust with the purchaser a partner in the trust, in order to borrow from the bank and then get ownership of the property. After that, the trust will sell the house to the purchaser with a rent-to-own contract. The purchaser is alone in getting the interest-based loan at the beginning and then shares in it at the end.
The ruling of the Committee is that it is not allowed to deal with this company as their model contains clear and explicit interest. We advise those in charge of this company to review and correct their model and to fulfill the trust that has been put in them by those who wish to avoid interest in their financial dealings.

Lariba: The contract of this company does not differ from a traditional mortgage that interest-based banks provide. This is the overriding contract between this company and the purchaser and what they present as an Islamic form to it actually has no existence in reality and has no legal authority in case of dispute.
The ruling of the Committee is that it is not allowed to deal with this company as their model contains clear and explicit interest. We advise those in charge of this company to review and correct their model and to fulfill the trust that has been put in them by those who wish to avoid interest in their financial dealings.

Additionally, the Committee would like to emphasize that the rulings previously made that are on the AMJA website represent the views of those individual scholars and do not necessarily represent the views of the RFC Committee. Furthermore, those rulings preceded this ruling and it could be the case that some of the scholars have adjusted their views to the views of the Committee. Finally, the Committee would like to encourage those Muslims who have experience and those who have funds to invest to create a competitive Islamic alternative, perhaps a credit union among themselves which may have profit in this world and we hope also a profit in the Hereafter if the intentions are sound.

May Allah bless everyone with acts of obedience to Him and may be the blessings of Allah be upon His best creation, Muhammad, and upon all his family and all of his Companions.

بسم الله الرحمن الرحيم
الحمد لله والصلاة والسلام على رسول الله أما بعد
فقد اجتمعت لجنة الفتوى بالمجمع في مدينة هيوستن من يوم الإثنين إلى يوم الأربعاء :  20 إلى 22 من ذي القعدة 1435هـ الموافق 15 إلى 17 سبتمبر 2014 مـ لإصدار قرار بخصوص الشركات الإسلامية لتمويل شراء البيوت بأمريكا وذلك بعد أن انعقدت دورة  كاملة لمناقشة البحوث المقدمة بهذا الصدد في حضور ممثلين لمعظم هذه الشركات ، ثم ما أعقب ذلك من تواصل مع بعض هذه الشركات ولجانها الشرعية، لتلقي إجاباتهم عن الإشكالات الشرعية الموجودة في عقودهم، وشارك في الاجتماع فضيلة الشيخ جمال زارابوزو حفظه الله.
وبعد الاطلاع عليها اتخذت لجنة الفتوى بأغلبية أعضائها  قرارها التالي

أولا: تأصيل شرعي لحال الشركات التي تعمل في مجال التمويل الإسلامي لشراء البيوت

:الشركات الإسلامية لتمويل شراء البيوت بأمريكا تنقسم إلى ثلاث فئات
الفئة الأولى : شركات عقودها في الجملة متوافقة مع الشريعة الإسلامية، ومما ساعد على ذلك أنها شركات لا تحتاج إلى بيع عقودها إلى مؤسسات الاستثمار الفيدرالية الربوية، الأمر الذي أعطاها الحرية في صياغة عقودها بكيفية موافقة للشريعة، من غير تعرض لضغوط من شركات التمويل الربوية، إلا أنه يلاحظ على هذه الشركات أن إمكاناتها محدودة، ولا تستطيع توفير بيوت للبيع إلا عددا لا يجاوز العشرات، ونطاق عملها محدود بولاية معينة، فلا تسد حاجة ملايين المسلمين المقيمين بأمريكا.
وفتوى اللجنة بخصوص هذه الفئة من الشركات هو جواز التعامل معها، والشراء عن طريقها.
الفئة الثانية : شركات عقودها في الجملة  قد تجنبت الوقوع في الربا الصريح، فلا تتعامل بالإقراض الربوي، وإنما تتعامل بعقود مباحة في الشريعة من حيث الجملة، كبيع المرابحة للآمر بالشراء، والمشاركة المتناقصة، والإجارة المنتهية بالتمليك،  وقد لمسنا من كثير من القائمين على هذه الشركات حرصا على تجنب المعاملات المحرمة، وبذلا لجهد كبير مع مستشاريهم القانونيين لإيجاد مخارج قانونية تجنبهم الوقوع في مبطلات العقود ، إلا أن عقودها قد اشتملت على بعض المعاملات المحرمة كالشروط الفاسدة، والعقود المشتملة على الغبن والغرر والجهالة ونحوه، واحتاجت إلى تتبع رخص الفقهاء، والتلفيق بين المذاهب، لإيجاد مخارج شرعية، نظرا لكونها شركات تحتاج إلى بيع عقودها إلى مؤسسات الاستثمار الفيدرالية الربويةمثل فريدي ماك ، من أجل أن تتمكن من بيع ما يكفي لسد حاجة ملايين المسلمين المقيمين بأمريكا، وشركات الاستثمار الفيدرالية الربوية تضع عليهم قيودا تمنعهم من تنقية عقودهم من أكثر هذه المخالفات، وهذه المخالفات تتفاوت من شركة إلى أخرى.
وفتوى اللجنة بخصوص هذه الفئة من الشركات هو الترخص في الشراء عند الحاجة أو الحاجة الماسّة، تبعاً لتفاوت درجة المخالفة، على أن تقدر الحاجة بقدرها.
ونحثّ هذه الشركات على مواصلة سعيها لتطوير عقودها لتلافي أوجه القصور التي نبهت عليها اللجنة، ومن توفر له بديل فاستغنى به فقد آثر السلامة، واستبرأ لدينه وعرضه!
الفئة الثالثة : شركات لا تزال تتعامل بالإقراض الربوي، وعقودها لا تعدو أن تكون استنساخا لعقود التمويل الربوية التقليدية، أو حيلاً غير مشروعة، وفتوى اللجنة بخصوص هذه الفئة من الشركات هو أنه لا يجوز الشراء عن طريقها، وننصح القائمين عليها بتصحيح عقودهم.

ثانيا: يؤكد المجمع أن فتواه في هذا الصدد تتجه إلى المتعاملين مع هذه الشركات من الراغبين في تملك عقارات من خلال تمويلها وعقودها، ما دامت العقود على ما هي عليه عند إصدار هذا البيان ، ومادام تطبيق الشركات للصّفقات على ما هو عليه ، فأي تغيير في العقود أو في طريقة تنفيذها قد يؤدّي إلى اختلاف الفتوى.
أما الشركات نفسها فيحتاج الإفتاء لكثير منها إلى مزيد من الاستقصاء حول علاقتها بشركات الاستثمار الفيدرالية، الأمر الذي لم يتسنّ للمجمع الاستفصال بشأنه، والوقوف على تفاصيله

ثالثاً:الحاجة هي ما يطلبهالأفراد أو المجتمع للتوسعة ورفع الضيق، فإذا فاتت دخل على آحاد المكلفين أو المجتمع حرج ومشقة خارجة عن المشقة المعتادة في التكاليف الشرعية. وقد يختلف نظر الناس في تقديرها، ولكن لجنة الفتوى بالمجمع ترى أن تملك البيوت للسكن يعد حاجة عامة للمسلمين المقيمين بأمريكا. أما تقدير الحاجة الخاصة لآحادهم فيرجع إلى وجود البديل الإيجاري المناسب من غير ضرر.

رابعاً : تطبيق هذا التأصيل على واقع شركات التمويل الإسلامي العاملة في الساحة الأمريكية

Guidance Residential
وهي تعتمد أسلوب المشاركة المتناقصة المنتهية بالتمليك في علاقتها بعملائها، وعقودها صحيحة في الجملة، ولكن يكتنفها بعض المخالفات الشرعية التي تتعلق بالصيانة والضرائب والتأمين حيث لا توزع بصورة عادلة على أساس حصص الشركاء.
وفتوى اللجنة بشأنها جواز التعامل معها للحاجة، وتوجيه النصح للقائمين عليها بمراجعة هذه الشروط الفاسدة.

Ameen Housing
هذه الشركة تعتمد أسلوب الإجارة المتناقصة المنتهية بالتمليك في علاقتها بعملائها، ولا تبيع عقودها لشركات الاستثمار الفيدرالية، وقد تجنبت الربا الصريح في معاملاتها، إلا أن عقودها لا تزال تكتنفها بعض الملاحظات الشرعية، كالغبن الذي يتمثل في تحديدها نسبة مئوية من الأجرة مقابل تكاليف الصيانة الأساسية، التي قد تزيد عن ذلك وقد تنقص، ومثل ما استحدثته مؤخرا من إلزامها المستأجر بغرامة تأخيرية عند التأخر عن الوفاء بالتزاماته المالية.
وفتوى اللجنة أنه لا حرج في التعامل مع هذه الشركة عند الحاجة، مع الحرص على الوفاء بالالتزامات في مواقيتها حتى لا يقع تحت طائلة شرط الغرامة التأخيرية، ومع توصية الشركة بتلافي هذه الملاحظات التي أشارت إليها اللجنة.

Devon Bank
وهو يتعامل بنوعين من العقود الإسلامية:
العقد الأول: المرابحة، ويكتنف هذا العقد شبهات حول التملك الحقيقي من قبل البنك للعقار قبل إعادة بيعه، بالإضافة إلى تضمنه بعض الشروط الفاسدة أو التي فيها غبن ٌ فاحشٌ، منها: الاستئثار بتعويضات التأمين مع إلزام العميل بدفع أقساطه، وحقّ البنك بتجميد حساب العميل لمجرّد الشك بعدم قدرته على السّداد، وحقّه في إعلان إخفاق العميل إذا لم يستخدم العقار لغايات السّكنى، أو عند موته، مع أنّ من حقّ ورثته أن يتولّوا العقد بعد ميّتهم، بل ذكر عقد المرابحه نفسه أن الورثة ملزمون بما في العقد !
وفتوى اللجنة أنه لا حرج في التعامل مع هذه الشركة بهذه الصيغة عند الحاجة الماسّة ، ومن تورع فقد آثر السلامة، واستبرأ لدينه وعرضه!
ويوصي المجمع البنك بالعمل على تصحيح هذه الصورة، وذلك بالتأكيد على ملكية البنك للعقار قبل بيعه، وتجنب الشروط الفاسدة ما استطاع.
العقد الثاني: الإجارة المنتهية بالتمليك، وتكتنفه مخالفات شرعية وشروط فاسدة، ومن ذلك: ورود عقدين مختلفين (البيع والإجارة)  في وقت واحد، على عين واحدة، في زمن واحد، وهي الصورة التي صدرت قرارات المجامع الفقهية بمنعها، لتعارض آثار العقدين، ويمكن تصحيحها بالفصل بين العقدين بحيث  يستقل كل منهما عن الآخر زماناً، فيكون إبرام عقد البيع بعد عقد الإجارة التي ينبغي أن تكون فعلية وليست ساترة للبيع، أو وجود وعد بالتمليك في نهاية مدة الإجارة.
ومن الشروط الفاسدة حق طرد العميل من العقار عند إخفاقه مع تغريمة الأجرة حتى يجد البنك عميلاً آخر، وعدم التزام البنك بتكاليف الصيانة الأساسية، وإلزامه العميل بدفع قسط التأمين مع احتفاظ البنك بحق أخذ تعويضات التأمين لنفسه، فعلى العميل الغرم وللبنك الغنم!
وفتوى اللجنة أنه لا حرج في التعامل مع هذه الشركة بهذه الصيغة عند الحاجة الماسّة ، ومن تورع فقد آثر السلامة، واستبرأ لدينه وعرضه، ويؤكد المجمع توصية البنك بالعمل على تصحيح هذه الصورة بالفصل بين العقدين، وتجنب الشروط الفاسدة ما استطاع

Islamic University Financial
ويرد على عقدي هذه الشركة مرابحة و إجارة ما سبق إيراده على عقدي المرابحة والإجارة المنتهية بالتمليك لدى ديفون بنك، فيمتهد لهما نفس الحكم، ونفس النصيحة! فيترخص في التعامل معها عند الحاجة الماسة، ومن تورع فقد استبرأ لدينه وعرضه!

Ijara Loan
وهذه الشركة تبدأ بتوجيه العميل إلى قرض ربوي بين، ثم تنشىء شركة اعتبارية يكون العميل جزءا منها، لتقترض من البنك وتتملك العقار، ثم تعيد بيعه إلى المشتري بعقد إجارة منتهية بالتمليك، فالمشتري تفرد بالقرض الربوي في البداية، ثم شارك فيه في النهاية!
وفتوى اللجنة أنه لا يجوز التعامل بعقود هذه الشركة لما تتضمنه من الربا الجلي الصريح! وننصح للقائمين عليها بمراجعة هذه الصيغة وتصحيحها، وفاء بالأمانة التي أناطها بهم عملاؤهم ممن يريدون التحرر من الربا في معاملاتهم المالية.

Lariba
وعقد هذه الشركة لا يختلف عن العقود الربوية التقليدية التي تبرمها البنوك الربوية، وهذا هو العقد الحاكم لهذه المعاملة وللعلاقة بين أطرافها، وما يقدم من صورة تعاقد إسلامية هي صورة افتراضية لا وجود لها في الواقع العملي، ولا يحتكم إليها عند التنازع.
وفتوى اللجنة أنه لا يجوز التعامل بعقود هذه الشركة لما تتضمنه من الربا الجلي الصريح! وننصح للقائمين عليها بمراجعة هذه الصيغة وتصحيحها، وفاء بالأمانة التي أناطها بهم عملاؤهم ممن يريدون التحرر من الربا في معاملاتهم المالية.

هذا، وتودّ اللجنة أن تؤكّد على أن الفتاوى المنشورة على موقع المجمع من قبل حول حكم التعامل مع شركة ٍ بعينها إنّما هي لآحاد المفتين ولا تمثّل رأي اللجنة بالضّرورة ، كما أنها سابقةٌ تاريخاً لهذه الفتوى ، فقد يكون بعض المفتين قد عدل عن رأيه القديم إلى رأي اللجنة . كما تحثّ لجنة الفتوى رجال الأعمال وأصحاب رؤوس الأموال من المسلمين على الاستعجال بإيجاد البديل الإسلامي المنافس، ولعلّ الاتحادات الائتمانية Credit Unions من بينها،  فهي تجارة رابحةٌ في الدنيا، ونرجو أن تكون كذلك في الآخرة أن صلحت النّيّات.
 وفّق الله الجميع لطاعته، وصلى الله على خير خلقه محمد، وعلى آله وصحبه أجمعين.

Omar Usman

Omar Usman is a founding member of MuslimMatters, Qalam Institute, Muslim Strategic Initiative, and Debt Free Muslims. He is a regular khateeb and has served in different administrative capacities in various national and local Islamic organizations. You can follow him on Google+ or on Twitter @ibnabeeomar. Check out his latest project at Fiqh of Social Media.

18 Comments

  1. Omer Iqbal
    October 14, 2014

    JazakAllahuKhairan for the article. It was indeed very informative as well as comprehensive in the information presented.

    Would it be possible to have a follow-up article which further clarifies, outlines, and details “need.” I believe, for me at least, that’s the last remaining difficulty in this issue; the clarification of what is need.

    Reply
    • February 24, 2015

      keep reading the Qur’an and ALLAHUL ALEEM, Will grant you wisdom to act forward, by HIS permission, further we would like to repeat the revelation that was given to Muhammad, sas, over 1430 years ago… …that “the Muslim, who believes, should give up all, (and I emphasize the word all), that remains of their desire to benefit from riba”…no matter, in what form or explanation it may appear in or be expressed about, an human being that calls themselves, “Muslim”, and additionally says that they are a “believer”, would give up all sources of and ideas in riba.
      signed: n11walews.wordpress.com

      Reply
  2. Muthahar Ahmed
    October 21, 2014

    As-Salaam-Alaikum,
    May I know what exactly is the defination of ” Need”. If I buy a home that I liked very much, I can save $400 in monthly rent and pay of my loan in an about 2yrs Inshallah.

    Your swift response is much appreciated.

    Jazak Allah Kahiran

    Muthahar

    Reply
  3. February 24, 2015

    in regards to the commentaries of those whom say they are scholars in Al Islam, and that they are Muslims, (or so-called Muslims), let their actions be the judge of all of what they say with their tongues. And if it be that that their tongues are their very actions, (actions in question); then we refer to any ambiguous answers that were placed upon this web page, we refer them to the Glorious Qur’an, where In chapter 9, Named: Taubah,

    Reply
  4. Amin
    June 3, 2015

    Guidance Residential requires a credit rating to obtain financing, which can only be obtained by taking out an interest based loan (including credit cards). If these are completely haraam, as some articles on this website suggest, then it would follow that you can’t deal with them without committing some impermissible act at one point or another in your life. Our scholars should clarify this contradiction.

    Reply
    • July 26, 2015

      This is simply not true. There’s ways to underwrite a mortgage with a 0 credit score, and we have never stated on this site that credit cards are categorically haram.

      Reply
      • Amin
        July 27, 2015

        Asalaamu alaikum and thank you for your reply. My statement about Guidance Residential is based on a conversation I had with one of their representatives, who clearly stated that a credit rating was required to work with them. I didn’t ask him to speak “on the record” so it could vary by area, but in my case I would not be able to take out a mortgage with a 0 credit score.

        It may be true that I haven’t seen anything on this site that stated that credit cards were categorically haram, but you have written articles on other websites in 2008-9 which clearly stated that they were. I am at a point where it would seem wise for me to start building a credit score because of the requirements of housing finance companies like this one and even many apartment complexes, and I found those previous statements to be unhelpful.

        The representative I spoke to advised me to take out a secured credit card with my bank, and although I was initially afraid that I wouldn’t be able to do this because of inevitable interest, it now seems to me that a secured credit card limited to the balance of a bank account and automatically paid from that bank account at the end of each month isn’t much worse than a debit card. I would like to see a frank discussion of building credit on this website with the intention of creating understanding, rather than fear, of credit cards and acknowledging the experiences of people like me who have encountered real difficulties from not having a credit score.

        Reply
    • farhad
      December 9, 2015

      There are many ways to build credit without paying interest. One can build your credit by using credit cards and paying them off before interest in charged. There is interest free leasing on vehicles or 0% APR financing on vehicles available as well. Furniture and electronics are usually offered with promotional 18 month interest free financing. As long as one is responsible about making payments on time, credit can be built in a halal way.

      Reply
  5. Al
    July 3, 2015

    How about La Riba’s car loans. I read that they use the murabaha on their website. Your input is much appreciated
    salamu alaikum

    Reply
    • July 26, 2015

      This podcast (http://debtfreemuslims.com/episode1/) lays out the criteria needed to look for in an Islamic company. First question to ask would be whether La Riba has a shari’ah board with experts in Islamic finance, and if they are in accordance with AAOIFI regulations.

      Reply
      • Mohammad
        March 8, 2016

        Assalamu Alaikum Omar

        Can you please advise if any of those rulings changed since publishing this article in 2014? Has any of those institutions changed their practices sine then? I was working with UIF, Devon, and La Riba and the loans just didn’t seem right. As of today, which one of those institutions would you say in compliant with Share’ah?

        JAK
        Mohammad

        Reply
  6. September 11, 2015

    Just FYI i deal with Guidance residential and you essentially are dealing with a regular bank on the other end US Bank. Eventually your dealing with a regular mortgage, They do not mention this anywhere but it is the reality of dealing with them. Customer service goes to US Bank. Payment goes to US Bank. Thats how it is in NY. Not sure if AMJA scholars know about this and if that changes their fatwa?

    Reply
    • Mohammed
      January 10, 2016

      That is called servicing. Majority of organizations hire a provider to service their customers. I.e. Take the payments, send late notices, government disclosures, etc. That doesn’t mean you are paying that servicer (US Bank in this case). For example, I offer my 10 houses for rent. I can hire US Bank to service my customers. They would then collect the rent and send out invoices and take repair requests on behalf of me. I would pay them $25 for each house for the service. The rent you pay will still come to me, not to US Bank.

      Reply
      • Owais
        January 11, 2016

        Thanks for the clarification. I did consult a lawyer who is trained in finance law and has experience making Islamic financial contracts and he thought the guidance contract is a good contract.
        Salaam

        Reply
        • Ali El
          August 15, 2017

          Assalamu Alikum,

          Are you currently dealing with Guidance Residential?

          Reply
  7. Mar
    December 18, 2015

    Thank you for this great analysis. A lot of these muslim financial institution are double faced. On the front door they appeal to muslim because they advertise themselves as Riba free, and on the back door they get there funding from the same banking institution as conventional banks and have interest in there contracts in back door. La Riba is one such institution I found who I found is a rewording rent as implied interest to meet contractual obligation from their funders. Don’t use LA RIBA to mortgage your house they mislead people into think there is no riba.

    Reply
  8. Mohammed
    February 9, 2016

    Assalam alaikom. I own a house and would like to purchase a bigger one. My family is getting bigger and I need a bigger house. I also know a muslim family in need of renting a house but cannot due to credit issues. Do you think it is permissible to take a loan from Guidance Residential to finance my new home and then rent out my current house? I can sell my house and put the money in the new house but I will be loosing a lot of money, as I bought it in 2007 when house prices were so high. Your feedback is greatly appreciated. Jazakom Allah khair.

    Reply
  9. July 5, 2016

    I had called Guidance as well as my friend are claiming that in case of a foreclose, we will get back 100% of our principal paid as far.

    Reply

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