By Dan Linehan
MANKATO — Abdulkdir Alasow has spent 26 years in the United States — seven of them in Mankato — but he says he hasn’t truly been a part of the communities he’s lived in.
As a devout Muslim, home ownership has been out of his reach.
Alasow’s religion prohibits him from charging or accepting interest. His only option, he thought, was to save up enough money to buy a house outright.
Hundreds of Muslim families in Mankato and across the country face the same plight.
It’s also a problem for public housing authorities like Mankato’s as they seek to move tenants from publicly funded apartment units into their own homes.
The president of a Michigan-based company, ijaraloans.com, was in Mankato on Monday, speaking to about two dozen Muslims and a handful of area lenders. His company helps banks and consumers understand the Ijara method, which company president Shoeb Sharieff said is economically the same as a regular home loan but satisfies rules required by Islamic law.
Alasow was positively gleeful after Sharieff’s presentation and said he has even chosen the house he wants to live in.
“I’m ready,” he said.
The Ijara method is like a typical mortgage, except with a few added steps to avoid the payment of interest.
Ijaraloans.com, or another entity, creates a trust, an entity that actually owns the home. In this case, the company would be the “trustee” and the consumer would be the “beneficiary” of the trust.
The resident then pays rent — and this is the key difference that makes the transaction Islamic — to the trust, instead of borrowing the money and paying interest on that.
So, from the consumer’s perspective, Ijara can best be summarized as “rent to own.”
Each month, the occupant pays rent for the house and a portion of that money goes toward the eventual purchase of the home. Much work has gone into making the Ijara process as cheap for the consumer as the typical mortgage, Sharieff said.
Islam, he said, encourages entrepreneurship and the charging of profit on goods (e.g. rent), but forbids the charging of profit on money (typically called interest). He said the rule is meant to discourage the wealthy taking advantage of the poor through unfair loaning practices.
Back home in Somalia, Halima Mumin says, families owned homes with backyards and everything, bought through traditional Islamic means. That’s especially important in Somalia, where it is typical to have eight, 10, even 15 children.
“This is a very important event today to us,” she said.
Mumin, who came to America in 1996, said she is a student at Minnesota State University. One of her children attends classes there, too, and she’d like to own a house in that area. She also wants to live near others from Somalia to help preserve their culture.
Mumin and a friend who told them about the speaker, Habiba Elmi, agree that Ijaraloans.com has a solid method for buying homes.
One man in the audience voiced concern that the Ijara method supports banks, which obviously charge interest in other transactions. But Sharieff responded that Muslim scholars agree that it’s only important that an individual’s own transactions be interest-free, and it doesn’t matter what someone else does with your money.
Dean Wellner, a senior mortgage loan officer for Mankato-based Minnesota Valley Federal Credit Union, said his company has done loans using this trust mechanism, but for reasons unrelated to the Islamic faith.
He said he hasn’t heard about the demand in the Muslim community for loan products such as the Ijara method.
“We certainly want to help those people buy homes,” he said.
Warren Anderson, a Minneapolis Realtor and Midwest director for Ijaraloans.com, said the Ijara process makes no difference to a lender.
But “from a customer’s perspective, it’s very different.”
Alasow agreed, saying “peace of mind” about the afterlife is important.
“This is our faith.”
