Allaah; Angels; Day of Judgement. Taqi Usmani is doing what most of us muslims practice in our daily lives anyways. bodies and will put an end to the abuse that currently takes place in the name Riba is when you make money out of money. It is far more better than renting, which is a clear exploitation of the needy. The paper on “The Declining Balance Co-ownership Program” seems to have answers to some of the questions that have been raised here. Now the money you get could be more or less than what you had paid over the time. Wa Allahu A'lam Wassalam Sincerely, Dr. Monzer Kahf ----- SUBJECT: Rationale for the Fatwa on Mortgage From: fiqh@fiqhcouncil.org Date: 12/13/2001 Question Dear Dr. Monzer, Assalamu Alaikum They are not charities – they are in this business to make money – and lots of it – and it is their right to do so. Imran HosseinIslamic Banks and other Islamic financial institutions are today lending money on interest through the back-door by disguising a loan as a sale on credit. What i don’t see a fair is charging customer twice for closing cost i think they can adjust that in the profit. The second is, the claim has not been authenticated as this has been affirmed by Muhammad As-shaibani - one of the chief scholars of the Hanafi Juristic School and a student of Abu-Hanifah- in his book: As-Siar Al-Kabir. 3. my questions would be: 1) do you still utilize the same contract as 1995 Read the post completely before commenting Disagree respectfully it may smell like X About living without a credit card, I’ve lived solely on a debit card for many years now, and have had no problems renting. you know, i actually somewhat agree with your criticism of the tone (despite being the author of the article) – but i would say the counterargument holds greater weight. And on that end, we’ll have to agree to disagree. There is a dire need from brothers and sisters to grow the institutes like I mentioned above by investing their savings in halal places instead of keeping in interest free checking accounts in conventional banks. Disclaimer: I have a contract with Lariba as well as with Guidance Residential. I’m not trying to be flippant about Islamic Economics, rules and regulations, and most importantly Riba. Student. If a person possesses 612.35 grams of silver or 87.479 grams of gold or any currency that equals the value of this amount of gold or silver, and this wealth remains in his possession for a complete year, then on the expiry of this year it will be wajib on him to give Zakah for it. Almir Colan. I would also be interested in hearing from our Shaykh Yasser Birjas, who is currently teaching Pure Paisa on economic transactions. ), but in an of themselves these programs are highly popular for obvious reasons. About dying in debt, you may notice in my first post I purposefully left aside the question of permissibility because I don’t feel it’s my place to really talk about it, I’ve engaged with my own thoughts after you mentioned it, and I added this to the list of disadvantages of home ownership. Additionally, I started experiencing growth in my career. It doesnt take a genius to notice the discrepancies… but I firmly believe that by being firm in our resolve to avoid interest and by staying the course, however flawed that may be, Insha’Allah things will improve. We at LARIBA believe that it is the RESPONSIBILITY OF THE EDUCATED MUSLIM TO READ, COMPREHEND, ANALYZE & COMPARE then make his/her own decision. 2) Wrt your note on investing, the only real investment listed is for continuing education…the rest is just saving up. If you are asked to pay back that same amount plus more (whether it is 1 extra cent) then is it classed as RIBA !! So, if the market rent is 10%, and I try to extract that, then the buyer would cry foul. If we practice conventional finance or window dressed Islamic finance then we aren’t like strangers. If you don’t call it interest on paper, then you lose that break. if you have not visited then please checkout http://www.positivemoney.org What if you die young and pass it on to your wife and kids who aren’t working? adopting the basic, confidence-boosting best practice of having a properly composed, properly operating Shari`ah The purpose of the Shariah board is to provide ongoing operation audits of shariah compliance. And I’ll repeat, there are also people with poor credit who also go to these institutions who were rejected by conventional banks (which is sad, sub-prime lending was a major factor in housing market tanking 2006 – 2008). I don’t disagree with that. Someone on the lower end of the ‘1%’ spectrum (40k let’s say) will probably never see a home in this scenario. This permission is attributed to the Hanafi madhhab, and some evidence is quoted for it. It should say Rent on all the paper work I sign. Asalamualaykum, Millions of Muslims have lived and died in this world without owning homes. It does not make sense to me… so I am likely not going to accept it. But I suddenly got a job in another city and need to sell the house, and due to the housing market the house will only sell for $50,000. The house to be purchased must be for the buyer and his household. need.Reference:www.themuslimweekly.com, Buying Houses with mortgages: Ruling European Council for Fatwa and Research, The Ruling On The Permissibility Of Financing Properties Using Islamic ijara Mortgages. Even more specifically – a scholar whose signature is used as public proof of endorsement by certain Islamic finance companies has come out and said that he has given no such endorsements. Except I’m missing something. your ultimate guide for Islamic finance but this is something that is I need your fatwa of buying homes through mortgage. I am not a mufti nor have any special knowledge in this subject so if I have said anything against the laws of Islam whether intentionally or not, I pray that Allah forgives me. I have a house that I want to sell. of providing the halal option. But I wanted to add to this very important discussion based on my experiences with both companies as well as my need for finding funding for a new house that I will be constructing the very near future. As it stands, from personal experience it seems most will go for the conventional banking approach (mostly due to ignorance and this being the way the world works, it’s as normal as breathing), and the balance, with good intention, will opt for the ijarah or musharakah contracts. It is important to understand that the Percentage figure they charge as monthly rent is calculated using the Bank of England Base rate but that does not mean that it is interest, They are only using the base rate to create a bench mark for calculating The rent. I have personally gotten a loan from Guidance and then ended up foreclosing on the house. Even if he is the only one who disagree with this fatwas his interest is trying to clarify what the Quran and Hadith said about this matter,we as Muslim especially (Arabs) the Quran verses are clear once we hear them only the message is clear to us it is our mother tongue language we can’t take some of it and leave some of it because it doesn’t suit us,if it is haram it is haram ,if it is halal it is halal,the RIBA is haram ,renting is halal opinions (whether actual fatawas from scholars or their skeptic remarks about Assalam-o-alikum Brother, The primary criterion for forbidding usury, according to a number of Quranic verses, revolves essentially around taking usury (not giving it). and not musharakah, hence confusion comes from assumptions beeing made. Does it clear up any confusion? Also, the heart of the problem lies with not having an islamic central And this is my personal opinion and highlights the fact that Omar’s or Siraaj’s opinions don’t represent MM as a whole, just as mine doesn’t. This is not some light thing that you got into. I would not have signed my name on it if I felt like I was doing something haram. Didn’t Allah declare war in the Quran on such people? ! guidance seems like a hybrid of musharakah and ijarah. If they obstinately persist in their defense of today’s so-called Murabaha transactions, and then learn in Allah’s court that it was not Murabaha but Riba, at that time they cannot plead for mercy from Allah for they will have misguided people, nor can they say “I did not know”. Also, there are tax breaks for “interest payments”, which can be very significant. Kindly refrain from comments of a personal nature. If you need space, you can rent house. I don’t care what you and the US Gov do. We should be men, not metrosexuals. The latest fatwa spreading like wildfire across the internet deals with a volatile topic – Islamic finance. In that case the insurance company (TAKAFUL) will pay to either repair the car or the value of a replacement if totaled. Other Scholars may disagree and they have the right to disagree. With that in mind, here are 3 important questions that must be raised in this regard. In this regard, the Council would send appeals to European banks to observe the needs of the Muslim community. There are some good things about it too. Paying $30,000 to a $12,000 tax break is nonsense math. The Prophet PBUH has cursed the person who gives Riba, takes Riba, records the transaction of Riba and the 2 witnesses who are during the signing of the contract. I’m certain many of these scholars feel a sense of responsibility in facilitating halal alternatives for the Muslim community. I almost payed my savings as down payment and got into GUIDNCE program thinking it is halal. The only scholars who ruled this innocent fixture to be permissible were from the Hanafi school, and hence taps came to be known as hanafiyah. In the same vein, it is difficult to appreciate why people seriously consider buying homes unless you’ve been in their shoes. Guidance (at least the last I checked) is musharaka based and I know personally, that at least initially, the contract Guidance financial presented to Mufti Taqi was approved. Most people do not even realize where the ‘riba’ in conventional mortgages is NOT that you are paying more on the house over a given time period but that you are ‘exchanging’ money for money i.e. THESE ARE QUOTATIONS FROM HIS BOOK. This is what the Hanafi scholars have explicitly stated, such as in Bahr al-Raiq, Hashiyah ibn ‘Abidin, and other texts, as well as the other scholars. Home; Fatwa. Would it be fair is YOU the 20% owner decided to rent the property to a third party and collected the rent by your self or is it more fair to share the rent with me co-owner? I am shocked and very much worried now. In point #3, you’re now telling me that I’m making a big deal about the costs of owning a home, but that was my point precisely and which you’re now repeating – depending on which factors you focus on, you will find benefit and harm both ways. The more the risk, the more your expected return. Thank you. Is this rule an explicit rule in the Quran or sunnah or was devised by scholars a thousand years ago to *protect* trades based on the general principles of shariah? *Islam does not require us to be compatible with current practices. This is a pretty strong statement. As such, the use of this fatwa by other financial institutions is illegal and misleading. Arguments such as Muslims dont need houses or don’t need financing for businesses are so misguided in the practical sense, that it’s even hard to respond to them. So please contact me and lets get personal jealousies/insecurities/complaints or whatever else you might have off MM… In the case of you not having my email, contact info at muslimmatters dot org and they’ll get you in touch with me. I just looked at the list of organizations Sh Taqi Uthmani is affiliated with – from his website and it does list Guidance. My salary at the time was decent, and yet I was repeatedly rejected. Croissants containing Alcohol Therefore when Mufti Taqi states that he has not agreed to any Ijarah contracts, that does not include Guidance. I can give myself a better tax deduction by paying rent and keeping the balance, assuming a mortgage and rent rate the same. If you choose to itemize your tax deductions, there is quite a bit one can write off when owning a home, as opposed to literally no deductions when renting…. My point was that there is a fine line between pointing out issues with certain financial institutes and the larger need for non-interest based alternatives. The car we buy with full down payment upfront is actually manufactured with money loaned on Riba. The difference between tijara (trade/bussiness) and riba is the potential for profit or loss! Muslims in charge of these schemes prove that the above argument is invalid and i think your argument holds weight if islamic banks were truly servicing the community. So, “rent” becomes an economic rent, not the “rent” in the typical terminology. What happens in a negative equity situation? Buying a 0% interest car might only be marginally better. Pardon my extremely late response to this discourse, I’m just coming across it after taking an introductory course on Islamic finance by bro Almir. The bottomline in any financial deal is the link between risk and return. As evidence these companies have posted a 15 years old fatwa of mine on their websites. I found this section most disturbing. Islam offers a solution for each and every issue we come across in the world, even if some people consider it unpractical. In summary, it says that if a person is not able to rent a suitable house for himself and his family in a proper location or the rent is too high, in that case he can purchase the house with a mortgage. The issue is open to debate as to whether the contract approved in We aren’t forcing them to change anything when we continue to give them money. 4) On the note about not getting approved by a regular bank, considering the unfavorable stipulations present in Islamic Finance contracts (higher down payments, higher monthly payments, etc), I’d assume these people would have little trouble getting a loan from a regular bank. So there is no excuse for the author of this article to omit the last phase from what Mufti Taqi Usmani wrote. 4. Board in place for each aspiring Shari`ah-compliant financial I wasnt offering such a reason, but attempting to demonstrate possibilities as to what might go through the head of a scholar contemplating this issue. A few banks offer it and it seems like a much cleaner approach than Ijara? Ahmed: if you could kindly post your contact info I’d like to join in filing foreclosure proceedings upon Guidance. I do not live in the US and am not familiar with the guidance financial contract… but if what you say is correct, this does sound rather dubious. My goal was not to offend anyone… If I have, I ask for your forgiveness. The co-op model being used by ISNA-Canada and Ameen Housing Co-op of California is interest free and could be replicated elsewhere. Given the aforementioned difficulties, I don’t see renting as a reasonable alternative, and think Islamic Finance is something that can offer comparable benefits in a more religiously conscious way. Also, when it comes to buying, many counties have generous first-time buyer benefits that allow them to qualify for low-priced homes at low interest rates. Despite differences of opinion, the religious ruling (or the mufta-bihi qowl ) is derived from the opinion of Imam Muhammad, and not the other Hanafi … I might have felt it a little before, but after actually signing up myself – i feel 100% that its deceit, and its companies that have no intention other than to repackage a haram product with a much higher muslim markup so they can rake in profits. Since stock-holders are considered owners of companies and since all companies (i.e. So long as some exist that are somewhat justifiable through ijtihaad, even with the presence of many shortcomings, insha’Allah it is better for one’s akhirah to follow that scholarly ijtihaad rather than surrender to explicitly riba banks that have far little to no scholarly approval. literacy on financial matters. But are home owners who buy homes, whether on riba or on the halal alternatives, really being exploited? If the house were to be sold for a profit/loss at that moment in time, the profit/loss should be shared 75-25%. Thus, our claim is and has always been that we use the same contract Again, I don’t indulge in riba Alhamdolillah, but if we are talking about objectives, then shouldn’t this be taken into account? Is declaring attempts for Riba Free banking Halaal or Haram without providing solutions, enough? Dear Brother Is it applicable in modern day financial systems, or are we just blindly stuck on such ancient rules that do not achieve their *objectives* today? If the family has a discussion and they agree together this is what they want, it’s not my business, but I don’t see myself doing this. all those who have posted in favor or against it. developed after paying the attorneys). Ebrahim Desai. 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