Posted on 08/05/2005 11:39:24 AM PDT by Andy from Beaverton
McLean, VA - Freddie Mac announced today a new initiative designed to help Muslims living in Michigan become homeowners while observing traditional Islamic restrictions on paying interest on mortgages and other types of debt. Developed with Standard Federal Bank and Detroit-based United Mortgage of America, the new initiative enables prospective homeowners to enter into long-term lease-purchase arrangements that permit them to later sell the house and profit from any home price appreciation.
Freddie Mac has agreed to invest an estimated $10 million in the purchase of these new lease-purchase mortgages as part of its Summer of Homeownership campaign. Freddie Mac’s “Summer of Homeownership” is a concentrated effort to pioneer new products, initiatives, and technology that will help expand homeownership opportunities to an additional 250,000 to 400,000 prospective homeowners a year.
“Today’s announcement again demonstrates Freddie Mac’s commitment to help America’s newest communities realize the traditional benefits of the American dream of homeownership,” said Saber Salam, vice president of customer strategies and offerings at Freddie Mac. “By working together with United Mortgage and Standard Federal, Freddie Mac is realizing its promise to foster homeownership opportunities in new and exciting ways.”
Under the initiative, prospective homeowners will work with United Mortgage, which will create a limited liability company (LLC) to purchase homes on behalf of the family. The LLC will purchase the property through a conventional 30-year fixed rate mortgage from Standard Federal Bank. Freddie Mac has agreed to purchase the mortgage.
The prospective homeowner is required to put down 20 percent of the home purchase price and enter into a 10-year lease with an option to buy with the LLC. The prospective homeowner’s monthly rental payments will cover the LLC’s mortgage, tax and insurance payments on the property.
The homeowner may buy the home during the lease term. At the end of the 10-year lease term, the homeowner may extend the lease and purchase option for an additional seven years. The lease allows the prospective homeowner to benefit from price appreciation at any time by exercising the purchase option and then selling the property to a new homebuyer.
“Working with Freddie Mac will enable Standard Federal Bank to serve the growing demand for home financing among Michigan’s observant Muslims,” said Mary M. Fowlie, Group Senior Vice President, Standard Federal Bank. “Today’s announcement underscores our commitment to provide our customers with the opportunity to become homeowners.”
According to Scott Elia of United Mortgage, members of the Michigan Muslim community have been asking for the opportunity to finance homeownership while maintaining their religious convictions. “We have been carefully developing a residential lease and purchase option program and have consulted with the respected scholar, Dr. Muhammad Imran Usmani, our Shariah Advisor, as well as outside legal counsel to develop the model documents and specifications for this program, and to ensure that it satisfies both Islamic principals and secular laws,” added Elia.
Freddie Mac’s agreement to invest in the mortgages underscores its commitment to expand homeownership opportunities for all of America’s households, including the nation’s estimated 2.5 million Muslim households. In March 2001, Freddie Mac became the first major U.S. mortgage investor to back Islamic homeownership when it agreed to buy housing contracts from the Pasadena, Calif.-based American Finance House -- LARIBA. Freddie Mac is also working with other lenders to meet the need for Islamic home financing in America.
Persons interested in learning more about this program are invited to attend an informational meeting on Saturday, August 11, 2001, at the Novi Hilton Hotel between 11a.m. and 2 p.m. The Novi Hilton Hotel is located at 21111 Haggerty Road, Novi, Michigan, north of Eight Mile Road, and west of I-275.
Standard Federal Bank is headquartered in Troy, Michigan and operates 180 Banking Centers, 13 Home Lending Centers and 950 ATMs throughout Michigan, Indiana and Ohio. As of December 31, 2000, the Bank had assets of $20.5 billion and deposits of $12.3 billion. Standard Federal is a wholly owned subsidiary of ABN AMRO North America, Inc.
United Mortgage of America is an assumed name of E & S Financial Group, Inc., a licensed mortgage broker and lender owned by Edward and Scott Elia. United Mortgage is a HUD approved mortgagee located in Farmington Hills, Michigan, offering mortgage loans in Michigan since 1997.
Freddie Mac is a stockholder-owned corporation established by Congress in 1970 to support homeownership and rental housing. Freddie Mac purchases single-family and multifamily residential mortgages and mortgage-related securities, which it finances primarily by issuing mortgage pass through securities and debt instruments in the capital markets. Over the years, Freddie Mac has opened doors for one in six homebuyers and more than two million renters in America.
Just so you guys know.... Arabs here in Michigan enjoy a no tax incentive for 5 years if they open up a gas station...then at the end of 5 years, they put the business in a cousins name to avoid another 5 years of taxes. Nice eh? IMPEACH GRANHOLM!
OK, I'll tell you what, how about if you, as a presumable non Muslim, go out and try to find a good lease to own deal structured this way, that is arranged by Fannie Mae. Go for it. Tell me what you find!
These transactions are actually a worse deal for the borrower than a conventional mortgage, so your argument doesn't fly.
RE: Anybody can do it; it's just that the rest of us don't want to.
Are you quite sure of that? I think that it is limited to "practicing Muslims" in point of fact. I believe that is one of the rules.
THIS IS UNFRIGGINBELIEVABLE!!!!!!!!!!!
I sure hope so!! But of course these Muhammedans are still borrowing money to buy a house. And they are paying interest for the right to borrow this money, but it's buried in the lease-to-own agreement
Nope. Open to everyone. Otherwise, such a program would not survive Federal and state religious discrimination laws.
I offer Lease/Option homes and have for years... as do most investors...
Just so long as these "devout" Muslim don't get the tax deduction on interest I'm happy. This home buying system claims no interest is charged and it damn well better be honestly run to where they lose the tax deduction. I hope they buy automobiles the same way.
(actually they are paying interest but it's built into the lease payments)
To be fair, their is nothing anti profit in the Quran... what the sharia law says is you CANNOT PAY or even EARN INTEREST... which means the "profit or fees" must be up front...
IE I can't borrow from a muslim 10,000 for 1 year at 10% interest... but I can borrown from him 10,000 for one year and agree to pay him 11,000 back at the end of the year. I find it kind of amusing, and frankly I'll pay straight interest all day long VS compounding anyway.. which these arrangements usually wind up looking like.
Fact is though most Muslims, do not follow this rule religiously.
Yes, I am thinking of converting, after I gather alot of credit card debt mind you.
To prevent duplication, please do not alter the heading. Thanks.
Well, no screaming or jumping, but yes, clearly I did not read the entire article. *blush* It's not my usual m.o.
Good point. Well, of course, better to own than rent, imho, in most cases. Of course, it's not just 'free' interest, the bank has an interest in making money, so it's in there somewhere, hence the 'rent'.
After you modified the headline, the thread up and died with little interest. It's too bad your search engine doesn't check for duplication of URLs.
it's no fun if the thread title doesn't give out some juicy crumbs that one can jump right one and wrap a tin foil around ...
Now people have to read the article, rather than relying on the breathless headline.
so you're saying there is nothing different about thi
s loan instrument, it's just being marketed to muslims on the basis of there technically being no interest involved?
IOW, this particular practice would have a special appeal on that basis, but it is not designed for them specifically?
Fine, I have no problem with that.
It's kind of goofy from their POV because anyway you cut it, money costs money (i.e. interest). Just dressing it differently.
Greed trumps cultural suicide. Just as greed trumps border security. This will get worse and worse in a horrific spiral until we get true leaders who will defend this nation and its culture and borders.
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