Regarding subject mentioned above, pls comment and share your opinion as bankers / economist in connection with simple economics analysis, opportunity and threat in Indonesia.
Your attention will highly be appreciated.
Regards,
Rudy Gunawan Syarfi
From: "Firson J Raharjo" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Subject: Creative Financing Lets Muslims Buy Homes
Date: Tue, 22 May 2001 21:44:09 -0600
Bismillahirrahmanirrahim,
Dikutip dari Washington Post:
http://www.washingtonpost.com/wp-dyn/articles/A47684-2001May18.html
Creative Financing Lets Muslims Buy Homes
Americans awash in credit cards, car loans and mortgages have long assumed
there's only one option for those who need something now and can't pay cash:
borrow the sum and pay it back -- with interest.
But the world of American finance is changing to deliver more options, thanks to demand from the growing number of observant Muslims in the United States and their adherence to Islam's moral code on financial matters.
Islam prohibits usury, or interest. In the United States, as lending and
borrowing are currently practiced, the rule has been an obstacle for Muslims seeking to buy a house or build a worship space. Often, they have waited until savings or donations could cover all costs.
But as the Muslim populatio! n in this country grows -- by some estimates to 6 million people -- its need for as much as $1 billion annually has led foundations, municipalities and for-profit financiers to find new ways of furnishing capital without charging interest.
In a watershed example from earlier this year, mortgage giant Freddie Mac
started bankrolling loans through a Muslim-friendly lender in Los Angeles whose acronym, LARIBA, means "no usury" in Arabic.
"They concurred that there is a huge, unmet demand," said LARIBA President Mike Maguid Abdelaaty. Since joining with Freddie Mac in January, he said, LARIBA has dropped its down payment requirements from 40 percent to 20 percent and is en route to doubling the number of loans it writes each month, from 10 to 20.
With at least six Muslim lenders now competing for customers, Hossam Jabri, of Cambridge, Mass., smells an opportunity to buy the home he's wanted for his family for five years.
"You used to need to invest for years before you co!
uld make the down payment," Jabri said. "I can tell there are many more options
available now."
What makes interest-free financing possible is a system in which the capital supplier shares ownership -- and risk -- with the consumer. Rather than lend a chunk of money so the consumer can own a home exclusively, for instance, the financier buys the portion of the property that the consumer can't afford and leases that share to the consumer at going market rates. As the lessee makes
regular payments, he or she gradually buys out the financier's share.
In the end, the Muslim consumer usually pays as much as a traditional
interest-bearing loan would have charged. But saving money is not the goal of interest-free purchasing, according to Hanif Crutchfield, a board member at the Minnesota chapter of the Council on American-Islamic Relations.
"You may not get a better financial deal, but morally speaking, from an Islamic point of view, you're in much better shape," Crutchfield sa!
id.
To the question of what's so bad about charging interest, Muslim scholars and clerics have multiple answers. Some say it's a sin for those with capital to take advantage of the needy by charging an interest fee. Others say that interest represents unearned income and that all godly income must be earned.
All seem to agree, however, that those who lend without sharing the borrower's risk commit a sin, and this is fundamentally why the Koran prohibits usury.
As Islam grows in the United States, it's not just for-profit lenders who are rethinking business as usual. Institutions of varied stripes are taking unusual steps to get money into the hands of observant Muslims.
The city of Boston addressed the Islamic challenge this year by selling a
$225,000 parcel at a discount to the Islamic Society of Boston in exchange for lectures, counseling and fund-raising assistance at Roxbury Community College.
In Minnesota, Hennepin County, which includes Minneapolis, started offer!
ing an Islamic contract for the thousands of African Muslims who live there and might want to buy tax-delinquent properties on which the county has foreclosed.
The Islamic contract costs $75, Crutchfield said, and makes houses available for about the same cost as interest-based contracts.
Foundations have also stepped forward to provide interest-free loans for Muslim community centers. The North American Islamic Trust, for instance, supplied $300,000 interest-free toward a $1 million facility for the West Coast Islamic
Society in Anaheim, Calif.
And in yet another type of solution, donors from the Persian Gulf are buying a rental property in Boston to generate cash for property upkeep at the proposed $14 million Islamic cultural center. Construction begins in September, even though the community needs to raise an additional $10 million to complete the project.
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