FREDDIE MAC, STANDARD FEDERAL BANK ANNOUNCE NEW ISLAMIC HOME FINANCING INITIATIVE FOR MICH. FAMILIES

Freddie Mac ^ | AUGUST 10, 2001

[tessalu]

Muslims are really skilled at playing tricks on themselves.
They do it all of the time.

[Modernman]

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?

It's structured a little differently, but rest assured that the banks get paid their interest. However, from a borrower's point of view, this type of transaction is a worse deal than a traditional mortgage.

IOW, this particular practice would have a special appeal on that basis, but it is not designed for them specifically?

This is essentially what's known as a "rent to own." Generally, the only people (other than Muslims) who take deals like this are people with poor credit who don't qualify for a regular mortgage.

It's kind of goofy from their POV because anyway you cut it, money costs money (i.e. interest). Just dressing it differently.

Absolutely. It's a sham. However, it meets the letter of the Koran's prohibition on interest. Whether it meets the spirit is open to debate.