Islamic Mortgages in the United States
Publication Year: 2006
Published by: Russell Sage Foundation
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Title Page, Copyright
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About the Author
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Bill Maurer is associate professor of anthropology at the University of California, Irvine.
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This short book was a labor of loveâlove for an subject that would not let me go while I was in the middle of a larger research project on Islamic banking, alternative currencies, and the problem of money in social analysis. That subject is the Islamic mortgage contract, which captivated my imagination from the moment I was first introduced to it. Perhaps it was because I had recently taken out a mortgage for my own first ...
Glossary of Arabic Terms
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Islamic banking and finance is a growth sector in the world economy. It seeks to create and market financial instruments and investment vehicles that adhere to Islamâs prohibition of interest. There are various estimates of its size and significance. According to one, Islamic finance has grown from around $50 million to over $250 billion and spread to seventy- five countries in only ten years (Janahi 2004). The Dow Jones Islamic Market Index, created in 1999, lists over 1,900 stocks with a ...
1. What Is a Mortgage? The History of a Religious Concept
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Mention mortgages and most peopleâs minds turn to homeownership and interest rates. In the early 2000s many Americans may not have associated mortgages with buying property so much as with generating extra income by refinancing their existing mortgages and cashing out the equity they had built up in their house to use for home improvements or other consumer spending. In 2002 and 2003 combined, Americans filed almost three times as many applications for refinancing loans as for conventional mortgages (see table 1.1).
2. What Is an Islamic Mortgage?
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In the aftermath of the attacks of September 11, 2001, Islamic banking came under the scrutiny of the Federal Bureau of Investigation (FBI), the Department of Treasury, and other U.S. government agencies that sought to track and interdict financial transactions that might be linked to global terrorism. The news media quickly generated reports about Islamic charities potentially posing as front organizations for money laundering or terrorist fund-raising, and traditional informal credit associations, like hawala, also suddenly came under suspicion.1 Where just ...
3. Postmodern and Puritan: A Tale of Two Companies
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Most of my quantitative and ethnographic research involved only two of the handful of companies that offer Islamic mortgage replacement products. As noted in the last chapter, many such companies are relatively new to the scene; indeed, most came into existence as I was in the middle of conducting this research. The two companies whose products and practices I examine more fully are well known both in Islamic banking circles and among many American Muslims. I discussed in ...
4. Who Wants Islamic Mortgage Alternatives?
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What are the demographic characteristics of people who want an Islamic mortgage? And who chooses which Islamic mortgage alternative? Are more conservative Muslims with strict, literalist interpretations of Islamic law drawn to Ijaraâs product, which is based on rent rather than a profit payment that resembles an interest rate? Are more progressive Muslims willing to embrace Searchlightâs less complicated product? The analysis of available quantitative data suggests exactly the opposite.
5. Choosing an Islamic Mortgage Alternative
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As the results reported in the previous chapter revealed, non-Muslim Americansâ stereotypes of Muslims are not particularly helpful predictors of Muslim Americansâ decisions and choices. This is true generally, of course. Nevertheless, I was puzzled by the quantitative data on the applicant pools for Islamic mortgages because they did not square with what I had learned from interviewing people involved in the business, including those charged with developing and marketing interest-free mortgage alternatives.
6. The Securitization of Islamic Mortgages
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On March 8, 2004, at a conference at the Crowne Plaza Hotel in Dubai, the Guidance Financial Group launched the first American Islamic mortgage-backed security product. The Guidance Fixed Income Fund is a mutual fund that holds securities backed by Guidanceâs real estate financing assets. Freddie Mac issues the securities. As a press release reported:
7. Home Financing and the Transformation of American Islamic Law
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Dale Eickelman and Jon Anderson (1999, 12) report that emerging Muslim leaders are âpresenting Islamic doctrine and discourse in accessible, vernacular termsâ by using âstyles of reasoning and forms of argument that draw on wider and less exclusive or erudite bodies of knowledgeâ (see also Leonard 2003, 20). Karen Leonard (2003) and Khaled Abou El Fadl (1998) note that, in the field of fiqh, the tendency in the United States has been for self-declared experts to make ...
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As we have seen, Islamic home financing at first proceeded in fits and starts. Several small local enterprises, cooperatives, and mosquebased organizations attempted various models of interest-free financing, but these efforts never achieved wider regional or national scope. Three events changed all this: the OCC interpretive rulings that declared lease-to- purchase and cost-plus arrangements a simple extension of a bankâs mortgaging powers; the support given to Islamic home financing by ...
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Page Count: 144
Publication Year: 2006