January 5, 2006
Interest Free LoansTopics: Islam And The War On Terror
A bank that has been offering special services for Muslims for two years has now formed a subsidiary to focus solely on the religious group.This is certainly an interesting way to get around the apparent spirit of Muslim Shariah law by charging "rent" instead of "interest".
The Ann Arbor-based University Bank has created University Islamic Financial Corp. to offer Muslims home financing, deposit accounts and Islamic mutual fund shares.
"The formation of the subsidiary allows us to have a financial institution which is 100 percent in compliance with the Muslim Shariah, the legal code of the Islamic religion," bank President and Chairman Stephen Lange Ranzini told The Ann Arbor News for a Saturday story.
Among the laws of Shariah is a ban against paying or receiving interest.
The bank's Islamic deposit accounts allow Muslims to open accounts where any profits are shared rather than paid as interest.
University Bank also offers a mortgage alternative loan transaction program - or MALT - which replaces a traditional home loan with a redeemable lease.
The bank holds the home in trust, and a home buyer makes monthly payments to that trust. Each rent payment includes a set amount of savings, which builds the buyer's equity in the home. When the savings account equals the home's original purchase price, the buyer owns it.
The mortgages are offered across the state, with 57 families in the Detroit area having such loans, and Ranzini said plans are to offer such mortgages nationwide.
Other banks also are targeting Muslims, said Tracey Mills, a spokeswoman for the American Bankers Association trade group.
Posted by tim at January 5, 2006 7:39 PM
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