Take that over into a sharia-compliant loan, and you're underwater from day one through the final years of the loan. Because all the interest is figured up front into the principal, a bank would essentially be writing you a $350k loan for a $200k house. It's all principal, not just the value of the home. With that dynamic in play, the homeowner would never be able to sell the home because of the massive disparity between what they owe and what the house is worth, and refinancing would also be almost impossible. The refi lender would have to write the bank a check for far, far more than the house is worth to buy out the loan, and that's corporate suicide in the making. Based upon the problem of turning all the interest into principal, I now believe that sharia-compliant loans are impossible unless lenders are forced to fundamentally rethink how home mortgage loans are handled. I don't think that's time and money worth wasting, tbqh.

 

You do know that many places already offer Sharia-Compliant loans, right?  So all these problems you're thinking of... yeah there's solutions.

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I was wrong about Trent Baalke. 

I referred to a conventional loan initially, and loans in general with my second example. There are programs out there linked to FHA and VA loans in which someone with no credit can receive a mortgage. Those programs generally do not exist with conventional loans, so good luck to someone with no credit who wants one of those.

 

It's not subsidizing a belief system if everyone, regardless of beliefs, is eligible for sharia-compliant loans. It would just be a new home loan product.

 

That said, I just thought of a potentially fatal flaw for sharia-compliant loans as we've envisioned them here. Typical loans have their outstanding value figured only by principal, with interest not factored in. That's how you can refinance or sell your home long before the 30 years are up; the amount in principal that you still owe on the house is probably much lower than the sale price or refi value of the home.

 

Take that over into a sharia-compliant loan, and you're underwater from day one through the final years of the loan. Because all the interest is figured up front into the principal, a bank would essentially be writing you a $350k loan for a $200k house. It's all principal, not just the value of the home. With that dynamic in play, the homeowner would never be able to sell the home because of the massive disparity between what they owe and what the house is worth, and refinancing would also be almost impossible. The refi lender would have to write the bank a check for far, far more than the house is worth to buy out the loan, and that's corporate suicide in the making. Based upon the problem of turning all the interest into principal, I now believe that sharia-compliant loans are impossible unless lenders are forced to fundamentally rethink how home mortgage loans are handled. I don't think that's time and money worth wasting, tbqh.

 

Another very good point brought up.  I just don't see how this could be a good thing for either side (lenders or buyers).  However, it would "show" or "prove" that the U.S. is "PC" and all inclusive with regards to one segment of the population that is perceived by many in our population as being "hostile" towards us.

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There are 10 kinds of people in this world.  Those who understand binary and those who don't.

and again, let me restate.  Even if you called it all principal and called it a finance charge.  the concept doesn't actually satisfy Shariah law because the person is still borrowing money and someone is profiting from their lack of funds.  That's antithetical to the abrahamic expression of wealth.  

 

And incidently, if you set this precedent, how long would it be before they decide that since the US carries a national debt and part of the national outlay is to service the interest on said debt that Shariah Muslims wouldn't have to pay taxes?

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The more that I study and research this, the more that I am firmly against it.  Sharia anything should not be adopted by law, and should not be adopted by business, especially banks.

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There are 10 kinds of people in this world.  Those who understand binary and those who don't.

The more that I study and research this, the more that I am firmly against it.  Sharia anything should not be adopted by law, and should not be adopted by business, especially banks.

Sharia is part of some of their religious beliefs. I don't think any religious anything be adopted by law let alone businesses. 

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No one who has never borrowed and repayed a loan in their life is going to be seriously comsidered for a mortgage... The more you know.

Lol. Ok.


There are many factors that go into a home loan. Not having any prior loans does not disqualify a borrower.

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98 on the mortgage brokers exam in the state of florida...  what about you?

 

1.) if you create a program that doesn't really take into account conventional appraisals of credit worthiness then its possible to qualify anyone, just ask the subprime lenders.  Then the greater question becomes is it good for the country to build another housing bubble and 07-09 should teach us that the answer is no. 

 

2.) It is possible that if you have an inordinate down payment and an inordinate income that you could find a lender to back you but in that case then it would be hard to show that a person that well financed would be put in a true hardship and the total inability to buy a home when they can just self finance. 

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I notice you like to write a lot of words, but have very little to say.


Once again, not having a prior loan does not exclude a person from getting a loan.


You only got a 98, maybe you missed that question on the exam? :-)

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98 on the mortgage brokers exam in the state of florida...  what about you?

 

1.) if you create a program that doesn't really take into account conventional appraisals of credit worthiness then its possible to qualify anyone, just ask the subprime lenders.  Then the greater question becomes is it good for the country to build another housing bubble and 07-09 should teach us that the answer is no. 

 

2.) It is possible that if you have an inordinate down payment and an inordinate income that you could find a lender to back you but in that case then it would be hard to show that a person that well financed would be put in a true hardship and the total inability to buy a home when they can just self finance. 

Congrats on your high score, but who said that clients for Sharia compliant mortgages wouldn't have a high credit rating?

 

There are plenty of bills to pay on time that don't involve interest.

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Congrats on your high score, but who said that clients for Sharia compliant mortgages wouldn't have a high credit rating?

 

There are plenty of bills to pay on time that don't involve interest.

Utilities are not factored into credit scores positively, only negatively if they go to collections. AFAIK, only loans and lines of credit are factored positively into your credit score.

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Utilities are not factored into credit scores positively, only negatively if they go to collections. AFAIK, only loans and lines of credit are factored positively into your credit score.

 

I just erased a big post on how I built my credit history without paying interest.

 

A Sharia-practicing Muslim can probably figure it out.  Hint: it involves small credit limits with retailers, discipline with paying the entire balances at the end of the month, and at least 2 years.

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I just erased a big post on how I built my credit history without paying interest.

 

A Sharia-practicing Muslim can probably figure it out.  Hint: it involves small credit limits with retailers, discipline with paying the entire balances at the end of the month, and at least 2 years.

Or they could just use a shady online service to take out an "interest-free loan" of a couple thousand dollars, paid in advance, and the "lender" would then report their $100/mo. payments as on-time for the next 20 months. There are ways to beat the system out there, and you don't even have to look very hard to find them. Taking out small lines of credit with merchants and paying the balance in full each month isn't exactly cheating. If anything, it's just responsible use of credit, although going for too many credit cards in a short period of time can get you flagged and kill your score.

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