is incorrect. Ijaraloans bought the rights to use the contract for Ijaraloans from the other institution. I know of few people who do the whole thing right so that the investment is profitable, they manage their finances and family responsibly, and take advantage of house buying as both a family endeavor and financial investment. No doubt, this will bring financial detriments to Muslims.Concerning cases where the Muslim is the recipient, i.e. Thank you and waiting for your new post. That is the general address for Darul Ifta and the letter will NOT be opened by Mufti Taqi. For example, there might be properties next to a key location (your work or your masjid) that you can’t rent. Over time the amount I use credit cards has gone up, and I now have to make credit card transactions on a fairly regular basis. i think your argument holds weight if islamic banks were truly servicing the community. Current Affiliated Institutions • Chairman Shariah Board, Central Bank of Bahrain • Chairman Shariah Board, Abu Dhabi Islamic Bank, U.A.E. is to grab AAOIFI shariah standards (book available from their website) God forbid, in case of accident if the car is totaled, what happens at that time financially? They your ultimate guide for Islamic finance but this is something that is In my previous article “Is insurance haram or halal?” (video above too), I discussed some of the main arguments for why insurance should be considered permissible from a Shari’ perspective. I’m a physician!!! Someone on the lower end of the ‘1%’ spectrum (40k let’s say) will probably never see a home in this scenario. The car we buy with full down payment upfront is actually manufactured with money loaned on Riba. – What if the company pays interest (riba) on its loans? Because it owns it’s share, it has a right to charge rent and that can be based on any bench mark. Now… there are many drawbacks in this model as well, but at least it isnt crass “islamic” commercialism. As this announcements by T. Usmani, the core problem is that these businesses aren’t regulated. 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. 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. You underestimate the intellect of Muslims around you. This is not to boast but to encourage other Muslims that hey if a middle class Muslim like me can do it, you can too. p.s. If you remember, in one of TDC (long time ago), Sh Ibn Jibreen (RH) said more or less same thing right? They do this in the When a client wishes to purchase something, but does not possess the cash with which to purchase it, the so-called Islamic bank enters into the fiction of purchasing the item at its cash price and then selling it to the client on credit. Al-Salamu `alaykum. So whoever has received an admonition from his Lord and desists may have what is past, and his affair rests with Allah . This is a very naive way of looking at things brother. If you follow a specific Islamic scholar are you doing the right thing, Financing Through Musharaka: Principles and Application, Economics & Ethics - the quest for equity & justice. Mufti Taqi Usmani is a scholar of great international repute and respect, particularly in the fields of Hanafi fiqh, and Islamic finance in general. Why buy what you cannot afford to buy? 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. As muslims, we need to be honest. Unfortunately this is a fact and the Muslim consumer simply needs to be aware of this and make an educated purchase. 2. THESE ARE QUOTATIONS FROM HIS BOOK. Allow me to post a different view.May Allah(swt) guide us on to the right path through this different opinion. Perhaps he can tell his students how he bought the house (or whether he rents it) – so we can follow him as a role model. I would not have signed my name on it if I felt like I was doing something haram. Q. It was a big deal to be given a loan to buy a home, and if those strict standards return, so too will better behaviors from the population in general over time. Mufti Taqi Usmani on his website dated 29 Oct 2007 actually talked about status of Guidance Financial Group Scheme and said that, “After a great deal of discussions and amendments brought in the scheme 1995 can still be applied today. 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. From a factual perspective, most of what you’ve stated are either ideal scenarios, or neglecting the full financial context – sure, you can itemize, get low interest rates, and get plenty of benefit, but net-net, you’re still in the negative upfront for many years and may or may not be saving if you rent and invest instead, and ignore many many costs that come with either purchasing a new or used home (repairs, upgrades, servicing and maintenance, taxes, etc). developed after paying the attorneys). Is it possible that UIF was merely defrauding me and the terms of the contract I have with them are more malleable than I perceive? Yes do we really need to own/buy a home? may be the islamic concern is not only whether it is benefiting you, but also it is also more benefiting to the oppressive loaners and sustaining them to keep oppressing the ummah. Who am I trying to deceive? I know Al Maghrib has started a lecture (Pure Paisa) but its hard for most people to get access to that information. the bank does NOT own the house it is financing for you. The inheritor can continue paying on it while renting it out, or sell it and make a profit on the home purchase. Riba / Interest/ profit is the not the real problem. Siraj’s take on this topic is sound. In the area I live, townhomes rent from $1500 (very low end) to $3500 (upscale communities). What Sh. However, if you look at it with an open mind and listen and follow their reasoning, you will understand them. Muslims in charge of these schemes prove that the above argument is invalid and If someone deceive you at the door by abusing a fatwa, are you ready to go in and have dinner with them ? sure, do you have a way of getting in touch with him? maybe option 1 (with a pinch of guilt) isn’t as bad (for eventual progress with more halaal non-riba options) as supporting people who lie/cheat/steal to gain our trust, only to zabiha a pig and give us qurbani? These institutions are NOT out there to cheat you, defraud you, or trick you. The amount required for a down payment is nominal in comparison to the total price of a home, and there are financial advantages that come with owning a home, including generous tax breaks. I was not in that lecture and heard it later. jamaalzarabozo dot com has more information about his class or you can refer to the past class notes on smahate dot com. Your car MUST be fully insured as per contract with a minimum deductible of $500. *Islam promotes Qarz and that has different rules. Many of the top scholars that are actively engaged in Islamic finance companies don’t let you see the actual Murabah/Musharaka/etc “Islamic” contract People are not poor, they’re spoiled, and they’ve been conditioned into considering taking out huge amounts of debt and credit as a way of living life. The point of confusion is this: But now you’re saying they’re not liable for declining property values?! The Prophet (saw) has explained that a spacious house is one element of three or four elements that constitute the concept of happiness.Rental houses do not fulfil all the Muslim needs. The question still remains is there a need for complete profit/loss sharing, i.e., some aspects of profit/loss sharing, if agreed upon. So the issue is how is the capital gains ($50K) on the house split between the home owner and the financial institution. Please provide full disclosure of who you are and what is your affiliation. The purpose of the Shariah board is to provide ongoing operation audits of shariah compliance. This is just one of the inconsistencies I have found in regards to this “co-ownership” model. Is it haram? Creed & Faith. Salam Adil Bhai, can you please give us the email for Taqi Usmani. Even the best landlord will raise rent on an annual basis, and having families move around every few years is not easy. Your last point is important in illustrating the differing perspectives on the topic of Islamic finance. I just looked at the list of organizations Sh Taqi Uthmani is affiliated with – from his website and it does list Guidance. There needs to be documentation furnished indicating which scholars have reviewed the final sale contract actually used in a mortgage and signed off on it. This fatwa was actually issued 15 years ago in peculiar circumstances prevalent at that time in favor of a house financing company, namely, Al-Amin Company based in Jeddah which they had intended to implement at that time but is no more acting in USA. Indeed, it is established that the mere desire on the part of the dying person to pay off his debts is sufficient for Allah to fulfill them on his behalf.”. For purposes of disclosure I dont not have affiliation with AAOIFI Most Muslims do not understand Islamic contracts as most any lay person of any background does not. With this, they will be in no need to resort to usurious loans to purchase houses. 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. Dar al-Ifta al Misriyyah is considered among the pioneering foundations for fatwa in the Islamic world.It has been the premier institute to represent Islam and the international flagship for Islamic legal research. Very nice blog and articles. What if you die young and pass it on to your wife and kids who aren’t working? Islamic Finance is faced with few inherent Problems: But I guess you already knew that. From the perspective of a da’ee, certain abuses of the deen is not reflective of the deen itself. So if you have some objective evidence to the contrary, you should present it. What happens in case the buyer wishes to sell the car? In the conventional mortgage the freehold is in the name of the debtor from start to finish. The fatwa is given according to the opinion of Imam Muhammad in the Hanafi school of thought.” The last line is the key in all of this discussion. Given the amount of social pressure, propaganda, and misinformation on home-buying, I don’t expect most Muslims even care about shari’ah compliant mortgages. if you have not visited then please checkout http://www.positivemoney.org This is an option that many practicing Muslims have opted to take on, and I myself have been renting for almost three years now. Prohibiting usury is a matter that concerns the host non-Muslim countries, and which Muslim communities can do nothing about it. In his writings on Islamic finance (example), it is clear that in a partnership the profit/loss risk must be shared. After having “used my mind” as La Riba requests, these contracts appear to be nothing more than syntactic window-dressing. I don’t disagree with that. I’m certain you’re familiar with the opinions coming out on a range of issues, from shaking hands to owning insurance (which is explicit gharar). We may be having or two or three different discussions, so let me hone in a bit and re-focus us where I went, and that was the reality of home ownership vs renting a home, not the perception of it, or the permissibility of it (I assumed in this discussion it’s permissible, and went from the angle of the huge downside of debt). To add to all of this, most Islamic Financing After two years I was surprised they started sending me dividends (I never intended for). Buying a 0% interest car might only be marginally better. Allaah; Angels; Day of Judgement. In a declining balance contract, say for instance that initially, the purchase price of the contract was split 50-50 between the homeowner and the financial institution. In a true partnership, you would not have the ultimate say in the sale of the house. Over and above the original contract, that is a question which needs to be asked from the individual shariah boards. 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