- Androscoggin Bank in Maine has developed an Islamic-compliant mortgage product to cater to the Muslim community.
- The new mortgage product allows Muslim families to buy homes and build equity, which can have a generational impact.
Like hundreds of Muslim families in Maine, Sophie Mutamuliza and her husband’s plan to have their own home has been a far-fetched target, failing to find a company that abides by Islamic law that forbids riba or bank benefit.
The family’s dream to own a home started when the couple got married in their home country of Rwanda fourteen years ago.
“It’s been our dream,” she told Maine Public. “It’s been our dream since back home.”
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Moving to Portland in 2013, Mutamuliza, who works for MaineHealth and her husband is a social worker, decided it was time to buy a home. This was when they found out there were no Maine-based banks that could meet their needs.
“So the problem has always been there. But it just really got more serious as the size of these communities grew,” said Reza Jalali, executive director of the Greater Portland Immigrant Welcome Center, estimating Muslim in Main between 15,000 and 20,000.
Trying to come up with a solution, Jalali said his organization began working with Androscoggin Bank several years ago.
New Product
Neil Kiely, CEO of Androscoggin Bank, said it was clear that the lack of Islamic-compliant financing was keeping some Muslim families stuck in rental units.
“So they don’t get the economic empowerment that comes from building equity in their own home, which can have a generational impact,” Kiely said.
“And they’re also denied the personal fulfillment we have about having your own home and the pride of ownership and raising your family there.”
After 18 months of research and community outreach, the bank managed to develop a mortgage product that abides by Islamic religious regulations.
Thanks to Androscoggin Bank’s new mortgage product, Sophie Mutamuliza and her family managed to buy a home in a quiet, wooded neighborhood in New Gloucester nearly a decade after first arriving in Maine.
“Now we felt, now we are here, no moving back,” she said. “We belong to Maine. And that’s what we’re looking for.”
In Islam, loans for profit are always connected to real economic activity, like products, benefits and services.
The purchaser, investor, or financer is guaranteed a return based on the profit generated by that real activity. It is not possible to extend a loan for any profit that is not a direct share of the return on real activity.
As for an interest-based loan, liability to pay a return is incurred without being connected to real economic growth. This is why Islam prohibits it and permits alternative instruments like cost-plus deferred payment (bay` ajil) and advance payment of goods (salam).