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Bank Touts Expanded Opportunities for Muslim Home Ownership
EFLA Chicago bank says it will begin selling its Islamic home-financing products to Freddie Mac -- one of the nation's largest investors in mortgages. The move will expand opportunities for Muslims to become homeowners without violating Islamic restrictions on paying interest, Devon Bank said in a press release. Devon Bank said it uses the Islamic "murabaha" trade model to avoid problems that make traditional loans objectionable to devout Muslims. Under murabaha, the bank buys a house or some other commodity for a client, then sells it to that client for cost plus an agreed-upon profit. Under Islamic law, interest may not be charged on loans. A Murabaha sale involves two separate contracts -- one in which the bank buys the property, and a second in which the bank sells the property to a client, who may then repay the bank in installments. Devon Bank said its Islamic home-financing model complies with both Islamic and U.S. law. It includes residential and commercial real-estate financing, financing for business equipment and trade goods, and construction financing. Posted by: Dragon Fly 2005-01-11 |
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