International Law

Islamic Con Job?

Interesting story from the Toronto Star Muslim leader calls sharia loans a `con job'

Why is it a con job?

"A controversial study looking at Islamic banking by the Canada Mortgage and Housing Corp. has ignited protest from some sectors of the Muslim community.

But despite opposition from the Muslim Canadian Congress, the federal housing authority said yesterday it is going forward with the study looking at banking that adheres to Islam's guiding body of rules, or sharia.

Tarek Fatah, founder of the Muslim Canadian Congress, which bills itself as a progressive Muslim group, said in an interview he was "shocked" to learn that "a Crown corporation is using taxpayers' money" for faith-based banking."

Hmm, I would not have thought that examining alternative loan solutions was a "con job".

But, I would have been wrong.

How does the sharia approved house loan work?

According to the article,

"Under sharia rules, it is not permissible for institutions to charge interest on loans. However, the deal is usually structured so that the homeowner ends up leasing to own the property, essentially paying rent instead of interest. As a result, those mortgages end up costing the homeowner the equivalent of an extra one percentage point or more. That is what concerns the congress.

"You are taking advantage of the most disadvantaged people. You are telling them that we will charge you more for your total mortgage and when you die you will go to heaven," Fatah said.

"They are using the holy books to prey on a vulnerable market."

And so it ever was.

Full post as published by Misleading Advertising Law on February 11, 2008 (boomark / email).