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For Muslims, Loans For Conscience

For clients, the way lenders calculate their profit margins and the provenance of their Islamic scholars matter as much as the total cost of the loan.

“We feel insulted as individuals for someone to take the interest rate of the day, change their name and tell someone they are Islamic,” said Yahia Abdul-Rahman, founder and president de Lariba, which uses comparable market rents to calculate its rental rates. . “We have the only model that respects all the rules of Islamic, Jewish and Christian laws,” he said.

Despite the interest of Freddie Mac and the Federal National Mortgage Association, or Fannie Mae, Islamic loans still seem fragile and local. Several businesses in the Detroit area failed because investors were unwilling to sign, and lenders said the partnerships and the third-party nature of the loans made them riskier and less attractive to underwriters.

Gone are the days when buyers had to pay 40% or 50% for an interest-free Islamic mortgage loan, but loans often come with high fees and additional closing costs, buyers said. And because the lender is actually buying the house, buyers said, it has been difficult to get home insurance.

But several buyers have said that mortgages give them peace of mind that goes beyond all other concerns. Rashid Abrar, 39, said many of his Muslim friends with traditional mortgages were paying them off at breakneck speed, trying to ease the spiritual burden. But Mr. Abrar financed his first house three years ago with an Islamic loan, and is paying it slowly and steadily.

“I am satisfied,” Mr. Abrar said. “I’m going at the rate of 30 years.”

For Brandon Metzger, 32, a convert to Islam, the feeling of ease extends well beyond the term of the loan.

Last year, Mr. Metzger and his wife, Shereen Solaiman, decided to move from their 2,000 square foot home in Ypsilanti to a larger house, closer to their children’s school. Last winter, they found a 3,200 square foot home with light brick, cathedral ceilings and chandeliers in a new Canton development, and the Metzgers decided it was the right one for them.