is this a trouble with some muslims or am I missing something?

[AQ]

Re: is this a trouble with some muslims or am I missing something?

1. Mutah is only allowed in one school of thought; Misyar is not allowed in some schools of thought, atleast the one I know of. Never heard of it being practiced. Perhaps, people who practice/believe in these can better answer that why it makes sense. I will keep away from this.

2. How exactly ‘Sharia Compliant Financing’ works? My initial understanding was that the ‘middle’ party actually pays off bank without interest in cash or however way, and then, sells the property to customer with profit in fixed installments… which is exactly how a legitimate business is done. What I am hearing now is that bank is involved at the back of it and interest is being paid at atleast one point… That defeats the purpose and if in fact, that is how it is run then, it is not islamic. If it is run how I had initially understood, then, there is no issue and it is perfectly Islamic.

3. We can ask and give same argument on how does a simple act of having nikah done with na-mehram makes the person mehram? it’s not that genes changed, it’s not that person became a blood relative…

As far as reply to the argument of Ume-zafeera goes, our faith should be that Prophet:saw2: was given for nursing because in Allah’s eyes, that custom was fine and Allah would have never let that happen to His beloved prophet, had that custom of nursing was not acceptable.

4. The hadeeth is researched in context by a number of scholars, and what I know it is about religious dress themselves that is, when you see people wearing such dress, you recognize that they belong to certain faith… ex: sikh’s turban, Rabbai’s specific dressing etc. Jeans and paints are considered bad by ignorants.

[UZ]

@X2

captain, that is why i chose my words carefully and said some muslims, not islam or muslims.

Q#3 is the only one that is diff and that is more meant for people to think that just because someone is not a blood relative does not mean there cant be a relationship based on respect, otherwise what is some milk eh?

answer to aap ko mil gaya hai ke milk kaa taaluq bhi to blood se hota hai

[QUOTE]
The milk gets mixed up in the blood and the child becomes "kinda" blood related
[/QUOTE]

and jitnay relations hotay hain woh Quraan mein defined and saari aap ki inheritance blood ke opper base kerti hai.
Hazrat Zaid (R.A.) Hazoor (p.b.u.h.) ke moun bolay betay they magar woh Hazoor ki wives se parda kertay they kyoon ke un ke liye woh naa mehram they.

[midnighteyes]

Re: is this a trouble with some muslims or am I missing something?

[QUOTE]
sleeping around is bad, it has societal, social, moral implications but then i see guys in beards throw around words like misyar and mutaah. what is that all about and why does it make any sense.
[/QUOTE]

1. Guys in beards do not automatically represent Islam and/or Muslims
2. Mutah is not allowed in any Sunni school of thought, it is only practiced by Shias. Rest of Muslims all consider it totally haraam, it is not a real marriage it is only zinna
3. Misyar is allowed as long as it fulfills all the requirements of Islamic marriage (like approval of wali, witnesses, mahr, public announcement of union etc). Basically the only difference is that the wife stays in a seperate residence and the husband is not financially responsible for her. This is her right whether she wants to agree to this or not. If she says no, then husband is Islamically obliged to provide for her, care for her etc. There is nothing wrong with this. Whats wrong is when they do it in secret, or dont get approval from the wali or dont make the marriage public and are just sneaking around ----then it just becomes too much like prostitution or something!!

[EcoShan]

@X2

I get confused, because I believe that Islam is a reasonable sensible religion, and things that are prohibited are prohibited for some reason. I dont understand the workarounds though, someone explain me this stuff

M really happy to see this thread cuz it proves that ppl still think about their faith "logically" instead of following it blindly like billions of other muslims :) Jazak Allah khair

[QUOTE]
so riddle me this batman...
[/QUOTE]

Actually i like spiderman better.

[QUOTE]
1) sleeping around is bad, it has societal, social, moral implications but then i see guys in beards throw around words like misyar and mutaah. what is that all about and why does it make any sense.
[/QUOTE]

Just to add, besides "societal, social, moral" sleeping around also has alot of medical disadvantages especially for women. now back to ur questionology, bhai u r smarter than me and u prolly know the answer urself aswell. If Lakir ke Fakir who follow the teachings of their "spiritual teachers" blindly start saying something, it doesn make it a part of islam. The primary source for understanding islam is Quran and Quran alone, anything besides is secondry. Quran talks about adultery at many places, just find any quran search engine and put in query for "adultery" and u will see that Allah at no place mentioned either Muttah or Misyar. Allah told watever is halal or haram. Allah talks in "detail" about marriage in Quran, then y didn Allah mention Misyar or muttah?? as it is also suppose to be a form of marriage or temp marriage?? Allah didn have enough space in Quran or got out of words??. Allah talks about NAMAZ about 67 times, talks about ZAKAT more than 30 times , and u will be surprised to know that Allah talks about marriage at 17 places in Quran and told who should u marry and how should u marry but forgot to mention Misyar and Muttah :S wow, my Lord seems to have a bad memory Naudu billah. so u know where m going right.

[QUOTE]
2) some say interest is usury, fine. but then the same people look at 'shariah compliant financing" , explain to me how shriah based financing in essence is any different than a fixed interest mortgage?
[/QUOTE]

I'd say its the best question in the list. also being a wana be economist i love the topic. Again quran describes Islamic economic system in detail.
these are some examples
2:275
2:276
3:130
7:85
4:20
5:90
3:180
25:67
7:31
98:5
64:15
64:16

Believe me there are many ppl in the market who claim to offer u islamic financing or shariah banking but they are just playing with the words like "Mudaraba, Murabaha, Musharaka, Riba, Wakala, Qard, Mudarib, and ijara" and selling u interest based financing and by hearing all those arabic words ppl think its halal lol.
But it doesn mean that shariah financing or banking doesn exist, for sure it does. Wat is interest?? its renting ur money, just like u rent a car or a house, and u have to pay regular fixed payments which is haram in case of money, but not in case of rent a car or rent a house. there are some banks who do partnership with u, for example a house is $100,000, u pay 10,000 and the banks pay 90,000. so u own 10% of the house and the bank owns 90% of the house. and now u sign a contract that u r gona pay the bank 90,000 back within 20 or 25 years without any interest. and now u start living in the house, the issue to consider is that u own 10% and the bank owns 90% but u r living in the house alone and taking advantage of it alone, and bank cant get any benefit cuz renting money in islam is haram, so wat bank would do is to do business they would rent u the 90% of the HOUSE that they own, instead of renting MONEY, and the rent is decided by 6 nuetral real estate brokers. (now keep in mind renting house is halal and renting money is haram, they might sound same but they are 1000% different concepts.)

so the first month u make a monthly payment on the house without interest, say its 1000 dollars and u pay rent for the 90% of the house that bank owns, and just assume its $ 600, so basically u paid bank 1600. now the next month bank doesn own 90% of the house it just owns 89% cuz u made a $1000 payment last month, so this month u would still make $1000 dollars interest free payment but instead of paying $600 rent of 90% of the house u would pay $595 for only 89% of the house and it would be $1595 this month, and next month 1590, and then 1585. so basically ur monthly payments keep on decreasing every month instead of fixed interest payments like conventional banks. and some brother here said that Lariba is doing haram stuff, but according to my limited knowledge what they advertise according to that they are totally halal and i wish they come to canada aswell so that i could get islamic mortgage, but might be he knows something about lariba that i dont know.

[QUOTE]
3) if you are not a blood relative you are na mehram and you observe hijab..so how does a simple act of nursing a child make him a 'mehram' its not that his genes changed, its not that he became a blood relative.
[/QUOTE]

Well wat is Mehram and na mehram? its a simple concept, with mehram u can not marry (besides hubby who becomes mehram after u get married to him) and the hijab rules are soft (its not like there is no hijab) so if a woman who breast feeds u, now u will do hijab infront of him but the hijab would be same as u do infront of ur mother in law and sister in laws, and vice versa, so its not a compicated issue. its just the issue of respect and feelings, if someone bestows u something for any reason thats ur own mother is suppose to give u, then thats na-mehram lady deserves enough respect to be treated like ur mom.

[Quote]
4) I have read by some that muslims should not dress like nonmuslims and that my jeans and jacket are bad, usually the type of people saying that are wearing the clothes traditional to their geographical area and either were clothes that they and non muslism both wore..and wear like iom middle east, or pakistan and india..
[/QUOTE]

Kal ko molvi mamu kehain gai ke fork se khana nahi khana, its haram cuz its a western invention :S
woh mulana Kishore Kumar noorani ne fermaya hai na ke

Kuch To Log Kahenge
Logon Ka Kaam Hai Kehna
Chhodo Bekaar Ki Baaton Mein
Kahin Beet Na Jaaye Raina
Kuch To Log Kahenge
Logon Ka Kaam Hai Kehna
ahemz

Islam only require u to wear clothes that are modest, cover ur awrah, and are lose enough not to reveal ur figure, thats it.

Didn mean to make it this long:s sorry but if anything sounds confusing just yell at me and i'll be back here.

[Mirch]

@X2

.
2) some say interest is usury, fine. but then the same people look at 'shariah compliant financing" , explain to me how shriah based financing in essence is any different than a fixed interest mortgage?
..

How is the LARIBA Model different from Other Models Used by Conventional Riba Banks and Mortgage Companies?

The Conventional Riba Banker and the LARIBA Finance Institution are first concerned with:

1. The ability of the borrower to repay by evaluating income and expenses of the borrower, and
2. The willingness and track record of the borrower to meet their commitments as reflected by the credit reports.
   Then the process differs drastically.
   For the Riba Conventional, if one qualifies the Banker will need to start by defining:
3. The Amount of the Loan,
4. The Number of Years of Repayment, and
5. The Rent of the Money, called Interest Rate. The profit he makes by renting the Bank’s money to the borrower.
   The Conventional Banker inputs the above data in a computer (amortization) program and solves for the Monthly Payment consisting of Repayment of Principal and the interest on the money.
   In contrast, the LARIBA Model starts by asking the homebuyer to:
6. Define the location, address and specification of the house they intend to buy,
7. Survey the rent of a similar properties in the neighborhood and come up with three independent estimates from reliable documented sources.
   And the LARIBA Finance officer also gets three independent rent estimates for the same house.
   This way, the buyer and the LARIBA Finance officer end up with 6 estimates of the rent. They then negotiate what they agree to as a fair rent for the property.
   The following is a numerical example that clarifies the differences between the approaches used in riba (conventional) and Islamic financing:
   A family wants to buy a house for $300,000. They only have $60,000 of the purchase price. They approach a bank to help them finance the house. The following is a comparison between how the process will likely go in a RIBA Banking setting as compared to Islamic Banking setting:
   Riba Conventional Banker:
8. Evaluates the application form.
9. Concludes that the family derives a good income and that they have a good balance sheet. Also, the banker finds that the family cash flow can help them pay for a larger house or even to take a bigger loan without putting the $60,000 down,
10. Decides to lend the family at a certain interest rate over a period of time.
11. The repayment period defined by the banker can even be longer than necessary because the banker wants to help improve the family’s surplus cash flow. In fact, it also helps the bank derive more interest income from a good qualified family as the loan repayment is extended.
12. In fact, the banker may convince the family to buy a bigger and more equipped house. This is because the higher amount will represent a small addition to the monthly payment and it will be taken care of by prolonging the financing period (term of the loan).
    Islamic LARIBA Banker:
13. Evaluates the application form.
14. Concludes that the family derives a good income and that they have a good balance sheet and good tax returns. In addition, the banker finds that the family cash flow is enough to cover the monthly payment for the house purchase.
15. Calls around to ask with real estate agencies such as Century 21, Caldwell Bankers the utility value of the home measured by the lease/rental rate.
16. Draws an agreement with the family that complies with the Islamic Finance legal requirements. In this agreement:
    4.1. The family would own 60,000/300,000 or 20% of the house (20,000 shares at $1 per share) and the LARIBA Bank/Finance Company would (temporarily) own 80% of the house (240,000 shares at $1 per share.) In the same agreement the family agrees to buy the bank’s share of the car for the same value or $(300,000-60,000=) $240,000. This way the bank does not own the asset that complies with banking rules and regulations. The family, based on their cash flow agrees to buy the shares owned by LARIBA at the $1/share price and pay back the bank’s share interest free over a period of 30 years or $80,000 per year. This is called the Return OF Capital.
    4.2. The family and the Banker, independently, survey the market to find a fair leasing rate for the house. They negotiate a fair lease and agree on it. Here the lease is divided between the family (20% in the beginning and rising to 100% over 30 years) and the Bank (80% in the beginning and declining to 0% over 30 years term.) This is called the Return ON Capital for the Bank.

4.3. The family and the Islamic banker, in order to satisfy the laws of the land, sign a promissory note, which documents the repayment of the debt (no time value of money) and the declining lease rate in a total monthly payment. In order to comply with the laws of the land, the Islamic banker inputs the monthly payments representing the lease rate and the Return of Capital into a conventional amortization schedule to figure the “implied” interest rate. This rate is disclosed to the client in order to comply with the “truth-in-lending” disclosure laws.
Please note that the resulting “implied” interest rate is not uniformly the same. It differs from one home and/or geographic location to another and it differs based on the leasing rate in the relevant market.
In the LARIBA Islamic Banking environment, the Islamic LARIBA banker encourages the family to pay their home off as fast as they possibly can in order to reduce the burden of debt on the family’s cash flow and free more money to save for the future.

More here:
LARIBA- FAQ

[EcoShan]

^^ seedha seedha keh detey ke i agree with ecoshan:snooty:
zaroor itni energy zaya kerni thi :S

[Mirch]

@EcoShan

^^ seedha seedha keh detey ke i agree with ecoshan:snooty:
zaroor itni energy zaya kerni thi :S

There is more in my post than meets your eyes. :halo:

FAQ link is pretty interesting read , do you know Freddie Mac / Fannie Mae are major investors in Lariba.
And the funds which Fannie Mae and Freddie Mac provide to Lariba are obtained by Fannie Mae and Fredie Mac all interest free and completely halal.

Read this in the the last FAQ of that FAQ section of the website.

“That is why we thank God for making Freddie Mac / Fannie Mae our major investors in addition to others in our community who have chosen to support this grass root community effort.”

And this is the logic given by Lariba to mix Riba with their halal finacing.

"Please understand that in order to finance 10 homes per month at $200,000 each, the company should have at least $20 million available every month or at least $240 million per year. This is a staggering number for our community to afford."

It is same reasoning given for mutah , since I am going to be away from my wife for 3 months and the chances are that I might sleep around so I am going to have a mutah.

Who has stopped Lariba to just finance only the number of houses they can afford too.

[EcoShan]

@Mirch

There is more in my post than meets your eyes. :halo:

FAQ link is pretty interesting read , do you know Freddie Mac / Fannie Mae are major investors in Lariba.
And the funds which Fannie Mae and Freddie Mac provide to Lariba are obtained by Fannie Mae and Fredie Mac all interest free and completely halal.

Read this in the the last FAQ of that FAQ section of the website.

“That is why we thank God for making Freddie Mac / Fannie Mae our major investors in addition to others in our community who have chosen to support this grass root community effort.”

And this is the logic given by Lariba to mix Riba with their halal finacing.

"Please understand that in order to finance 10 homes per month at $200,000 each, the company should have at least $20 million available every month or at least $240 million per year. This is a staggering number for our community to afford."

---

It is same reasoning given for mutah , since I am going to be away from my wife for 3 months and the chances are that I might sleep around so I am going to have a mutah.

Who has stoped Lariba to just finance only the number of houses they can afford too.

I went through all the FAQ’s of Lariba 2 weeks ago and i was shocked, astaghfirullay Fennie Freddie involved, haram haram haram lol then i read the whole system and got to know alhumdulilah its halal, and i really wish that this guy comes to Kunayda.

[Mirch]

@EcoShan

I went through all the FAQ's of Lariba 2 weeks ago and i was shocked, astaghfirullay Fennie Freddie involved, haram haram haram lol then i read the whole system and got to know alhumdulilah its halal, and i really wish that this guy comes to Kunayda.

The way they are financing homes may be halal but the funds coming from Feenie and Freddie are not interest free , Fannie and Freddie might also be lending to Lariba interest free but Fannie and Freddie pay interest to their investors , how can that be halal ?

[EcoShan]

Re: is this a trouble with some muslims or am I missing something?

Do u get check for ur kids every month?? if its not welfare state then do u get tax return quarterly? if not do u get any government benefits and are u contributing in retirement funds??? everything comes from government and they invest it either in their own markets or they lend it to other countries for intrests, its an interest based economy and ineterest is gona trap u one way or another, ur goal should be not to give interest and not to take interest, wat others are doing u can not change it. ur car insurance also gets invested in market u know that.

[X2]

@AQ

1. Mutah is only allowed in one school of thought; Misyar is not allowed in some schools of thought, atleast the one I know of. Never heard of it being practiced. Perhaps, people who practice/believe in these can better answer that why it makes sense. I will keep away from this.

what is the basis of either of these practices, and what are the arguments for and/or against?
i thought religion would have one ruling as something of this nature.

@AQ

1. How exactly 'Sharia Compliant Financing' works? My initial understanding was that the 'middle' party actually pays off bank without interest in cash or however way, and then, sells the property to customer with profit in fixed installments... which is exactly how a legitimate business is done. What I am hearing now is that bank is involved at the back of it and interest is being paid at atleast one point... That defeats the purpose and if in fact, that is how it is run then, it is not islamic. If it is run how I had initially understood, then, there is no issue and it is perfectly Islamic.

sells the property with profit in fixed installments, do you know how these installments are calculated? call it profit, call it interest, its the same thing.

@AQ

1. We can ask and give same argument on how does a simple act of having nikah done with na-mehram makes the person mehram? it's not that genes changed, it's not that person became a blood relative...

yeah but there is a little bit of a difference between a contract to get married which is a step taken by adults out of their own free will.

Dont think I am against this, to me its just funny how people use the whole topic of oh we cant adopt because the kid will be na mehram. I think in the end it goes to intentions. teh argument seems funny coming from people who have other na mehrams mixing casually in their family events and homes.

[Mirch]

Re: is this a trouble with some muslims or am I missing something?

Now on a personal note , I take my cue from Quran. Quran has prohibitted accepting riba, it has condemened those who accept riba, but to your astonishment you will not find anything against paying riba. or against those who pay Riba. So using your own logic" Allah didn have enough space in Quran or got out of words??. " or "my Lord seems to have a bad memory Naudu billah"

It is because Allah knew that there will be times and situation where we the Muslims will have no choice but to pay interest , buying a home on interest to provide a reasonable living quarters for family is one such situation. So the wabal of accepting Riba is on those who are making us pay it not on us as per Quran.

[X2]

@ume-zafeerah

jin logo ne yeh faisla ker liya hia ke haraam haraam nahi hai balkay halaal hai to baat hi khatam ho jaati hai un ke saamney kisi bhi kisam kaa Islamic system rakh diya jaaye woh us ko mannay waley nahi hain kyoon ke us mein un kaa nuqsaan hai .Payaray Nabi ke zamanay mein bhi kuffar is baat ko nahi mantay they kyoon ke us mein un kaa nuqsaan hota thaa.Yeh soud kaa nizaam aaj ka nahi hai balkay Hazoor (p.b.u.h.) ke zamanay mein bhi yeh exist kerta thaa aur aaj ke modren log yeh samjhtay hain ke yeh modren economy ke paida kiye hoay challenges hain.
Ghazwaae Badr se pehlay Abu Sufyaan kaa jo kafla samaan ley ker aa raha thaa us mein pooray kuffar-e-makka kaa paisa invest hoa thaa aur yeh sari investment unhon ne credit aur sood per liye hoaa thaa jo aajkal ke zamanay mein bhi hoti hai.
naa mein islamic financing ke liye kaam kerti hoon naa hi mein ne un se loan liya hai lekin mera kayaal hai ke agar aap soud se bachan chahtey hain to Islamic financing hi America mein wahid option hai .
Mein ne Islamic financing to bohat detail mein parha hai agar aap ko Islamic financing ki basics samjhni hain to “mufti Taqi Usmani” ki books parhein.Meray kayaal mein aap ko Islamic finances ke basics and concepts nahi pata hain pehlay samjh ker aayein meray pass itna phaltoo time nahi ke un logo ke saath mein apna time zaya karoon jo haraam ko haraam nahi samjhtay.

Hazrat Mohammad (p.b.u.h.) ke zamanay mein jo ARAB TRADITIONS sahi theen un ko Hazrat Mohammad (p.b.u.h.) ney rehnay diya aur jo ghalat theen un se mana ker diya kyoon ke ARABS hi mein bohat puranay zamanay se Anmbia chalay aa rahey hian aur un mein anmbia ki rawayaat maujood theen jo AHLE AHNAAF follow kertay they.Aur Hazrat Mohammad ke anay ke waqt sab mushriq nahi they eik tabqa ahley Ahnaaf thaa aur yeh rawayaat un se aa rahi hian.Aur agar yeh rawayat ghalat hoti to Hazarat Mohammad (p.b.u.h.) ko kabhi Hazrat haleema doodh naa pilaaten kyoon ke nabi paida hotay saath nabi hota aur woh koii aisa kaam nahi kerta jo ke baad mein shariah mein haraam ho jaaye.

meray paas aap ke liye bohat saarey sawaalaat hain pehlay aap in ke jawaabaat dein.
[/QUOTE]

not good with roman urdu of this length, please try english. thanks

[Mirch]

@EcoShan

Do u get check for ur kids every month?? if its not welfare state then do u get tax return quarterly? if not do u get any government benefits and are u contributing in retirement funds??? everything comes from government and they invest it either in their own markets or they lend it to other countries for intrests, its an interest based economy and ineterest is gona trap u one way or another, ur goal should be not to give interest and not to take interest, wat others are doing u can not change it. ur car insurance also gets invested in market u know that.

Read post # 12 with an open mind.

[AQ]

@X2

what is the basis of either of these practices, and what are the arguments for and/or against?
i thought religion would have one ruling as something of this nature.

I never understood and it never made sense whatever argument were given to me… The school of thought I follow, do not allow such practices, and I have researched and found out, for example, how mutah was abolished and the history behind it…

@X2

sells the property with profit in fixed installments, do you know how these installments are calculated? call it profit, call it interest, its the same thing.

I do not know how they calculate it… this is what I was asking… how does it work? the basic I know if the fixed installments are calculated after dividing the selling price in equal amounts, then, I do not see any interest being in picture…

@X2

yeah but there is a little bit of a difference between a contract to get married which is a step taken by adults out of their own free will.

Dont think I am against this, to me its just funny how people use the whole topic of oh we cant adopt because the kid will be na mehram. I think in the end it goes to intentions. teh argument seems funny coming from people who have other na mehrams mixing casually in their family events and homes.

Agreed… “Razaa’at” is islamic concept and there are specific detailed rulings on it… Syedana Haleema Sa’diya was considered exactly like mother by Prophet’s … If mehram, na-mehram would have been the issue then, there would not have been an incident where prophet actually stood for her in respect and actually did not do pardah from her…

[X2]

@Mirch

How is the LARIBA Model different from Other Models Used by Conventional Riba Banks and Mortgage Companies?

The Conventional Riba Banker and the LARIBA Finance Institution are first concerned with:

1. The ability of the borrower to repay by evaluating income and expenses of the borrower, and
2. The willingness and track record of the borrower to meet their commitments as reflected by the credit reports.
   Then the process differs drastically.
   For the Riba Conventional, if one qualifies the Banker will need to start by defining:
3. The Amount of the Loan,
4. The Number of Years of Repayment, and
5. The Rent of the Money, called Interest Rate. The profit he makes by renting the Bank’s money to the borrower.
   The Conventional Banker inputs the above data in a computer (amortization) program and solves for the Monthly Payment consisting of Repayment of Principal and the interest on the money.
   In contrast, the LARIBA Model starts by asking the homebuyer to:
6. Define the location, address and specification of the house they intend to buy,
7. Survey the rent of a similar properties in the neighborhood and come up with three independent estimates from reliable documented sources.
   And the LARIBA Finance officer also gets three independent rent estimates for the same house.
   This way, the buyer and the LARIBA Finance officer end up with 6 estimates of the rent. They then negotiate what they agree to as a fair rent for the property.
   The following is a numerical example that clarifies the differences between the approaches used in riba (conventional) and Islamic financing:
   A family wants to buy a house for $300,000. They only have $60,000 of the purchase price. They approach a bank to help them finance the house. The following is a comparison between how the process will likely go in a RIBA Banking setting as compared to Islamic Banking setting:
   Riba Conventional Banker:
8. Evaluates the application form.
9. Concludes that the family derives a good income and that they have a good balance sheet. Also, the banker finds that the family cash flow can help them pay for a larger house or even to take a bigger loan without putting the $60,000 down,
10. Decides to lend the family at a certain interest rate over a period of time.
11. The repayment period defined by the banker can even be longer than necessary because the banker wants to help improve the family’s surplus cash flow. In fact, it also helps the bank derive more interest income from a good qualified family as the loan repayment is extended.
12. In fact, the banker may convince the family to buy a bigger and more equipped house. This is because the higher amount will represent a small addition to the monthly payment and it will be taken care of by prolonging the financing period (term of the loan).
    Islamic LARIBA Banker:
13. Evaluates the application form.
14. Concludes that the family derives a good income and that they have a good balance sheet and good tax returns. In addition, the banker finds that the family cash flow is enough to cover the monthly payment for the house purchase.
15. Calls around to ask with real estate agencies such as Century 21, Caldwell Bankers the utility value of the home measured by the lease/rental rate.
16. Draws an agreement with the family that complies with the Islamic Finance legal requirements. In this agreement:
    4.1. The family would own 60,000/300,000 or 20% of the house (20,000 shares at $1 per share) and the LARIBA Bank/Finance Company would (temporarily) own 80% of the house (240,000 shares at $1 per share.) In the same agreement the family agrees to buy the bank’s share of the car for the same value or $(300,000-60,000=) $240,000. This way the bank does not own the asset that complies with banking rules and regulations. The family, based on their cash flow agrees to buy the shares owned by LARIBA at the $1/share price and pay back the bank’s share interest free over a period of 30 years or $80,000 per year. This is called the Return OF Capital.
    4.2. The family and the Banker, independently, survey the market to find a fair leasing rate for the house. They negotiate a fair lease and agree on it. Here the lease is divided between the family (20% in the beginning and rising to 100% over 30 years) and the Bank (80% in the beginning and declining to 0% over 30 years term.) This is called the Return ON Capital for the Bank.

4.3. The family and the Islamic banker, in order to satisfy the laws of the land, sign a promissory note, which documents the repayment of the debt (no time value of money) and the declining lease rate in a total monthly payment. In order to comply with the laws of the land, the Islamic banker inputs the monthly payments representing the lease rate and the Return of Capital into a conventional amortization schedule to figure the “implied” interest rate. This rate is disclosed to the client in order to comply with the “truth-in-lending” disclosure laws.
Please note that the resulting “implied” interest rate is not uniformly the same. It differs from one home and/or geographic location to another and it differs based on the leasing rate in the relevant market.
In the LARIBA Islamic Banking environment, the Islamic LARIBA banker encourages the family to pay their home off as fast as they possibly can in order to reduce the burden of debt on the family’s cash flow and free more money to save for the future.

More here:
LARIBA- FAQ

so in both regular mortgage and this lariba financing, the institution and the customer have a share, they ahve their own equity.

there is a final value of the property determined and your payments are based on that sum and number of payments. in both cases

you can pay off sooner than the term, in both cases..

its amusing to see that lariba to meet the laws of the land thus calls sme thing that they consider haram and note it as something haram..

implied interest rate or real interest rate…in the end its the same,

you can put lipstick on a pig, but it is still a pig.

while the name of things are different on purpose, and this whole runaround on rental values is given, which really is a proxy for payments..and then the whole deal with time period and "implied interest rate’

come on guys…really.

PS: interest rates vary by market as well.

[X2]

@AQ

I do not know how they calculate it... this is what I was asking... how does it work? the basic I know if the fixed installments are calculated after dividing the selling price in equal amounts, then, I do not see any interest being in picture....

here is the basic difference. a conventional mortgage would be for a property that is 400K today, they will say that on a 30 year mortgage at X% would be $700K , the total amount paid will be $XX for 360 installments, you can pay off sooner if you wish by increasing your payment amount each month.

in this islamic financing, they too give a final alue of the property, and a miracle happens, they also calculate that the property value in 30 years would be $700K, then they say oka u pay monthly installments and how much each installment would be for the 360 installments. (this whole topi drama of getting future value from agents..well teh gaents are running those numbers based on interest rates and giving the numbers to these islamic finance guys, you can get a few estimates and they may vary slightly based on interest rates and maybe some estimate of market growth rate..but interest rate calculates a big part in it. and if interest is haram, how can that be used as a basis of a supposedly halaal transaction.

naak ko samnay say pakro, ya sarr kay peechay say haath ghuma lar pakro...baat aik hi hay.

[AQ]

Re: is this a trouble with some muslims or am I missing something?

In that case, it is wrong according to my little knowledge of Islam...

The selling price has to be of currrent value... and the buyer should not be charged a penny above in total no matter how many installments and how many years are there...

[EcoShan]

@Mirch

Now on a personal note , I take my cue from Quran. Quran has prohibitted accepting riba, it has condemened those who accept riba, but to your astonishment you will not find anything against paying riba. or against those who pay Riba. So using your own logic" Allah didn have enough space in Quran or got out of words??. " or "my Lord seems to have a bad memory Naudu billah"

It is because Allah knew that there will be times and situation where we the Muslims will have no choice but to pay interest , buying a home on interest to provide a reasonable living quarters for family is one such situation. So the wabal of accepting Riba is on those who are making us pay it not on us as per Quran.

Ya Habibi, ya bazurgaan e muhtaram, ya chashm o chiragh, ya totaye mere dil, u r proving the same point that ive been trying to prove in this thread since begining, ya Azeezan e muhtram prolly u miss read any of my posts, u said Lariba is not halal cuz they take their money from fennie freddie and fennie freddie gives interest to fed reserves and i said this is a interest based world and u have no control on it and doesn matter fennie freddie pay interest or no but u r not paying interest by getting mortgage from Lariba, and i gave those examples that u have to pay interest or use money that has come from interest, so u and me are on the same page of the story.

[Mirch]

@AQ

In that case, it is wrong according to my little knowledge of Islam...

The selling price has to be of currrent value... and the buyer should not be charged a penny above in total no matter how many installments and how many years are there...

Eggjaktley.