Toronto – UM Financial has supported Canadian Mortgage and Housing Corporation (CMHC) $65,000 study on Islamic Mortgages and other faith mortgages. Islamically acceptable financing/mortgage is a product/commodity does not come at the expense of others products nor does it compel any Canadian to purchase.
UM is a premier Canadian Islamic finance corporation. The company secured a $120 million facility from Credit Union Central of Ontario in 2004, which is used to finance Shariah compliant real estate residential properties in Canada.
In a letter to Karen Kinsley, CEO of the Canada Mortgage and Housing Corporation, the CEO of UM Financial Omar Kalair said, “Islamic mortgages are equity partnership with payments coming in the form of profits(rental). Islamic finance is structured trade products devoid of usury, similar to ethical products which have filters.”
A similar mortgage model is used by a Manitoba Credit Union serving the Mennonite community which abstains from usury. As people of different faith have options for buying meat when going to a grocery store between Islamic meat (halal), Jewish meat (kosher), organic fed (ethical), etc we as a company offer people who wish to have financing devoid of usury products available to them.”
To the criticism the industry’s proponents respond that the difference is there because Islamic law sees one, even if functionally it’s hard to find it. “It’s like the difference between a wife and a live-in girlfriend,” says David Loundy, vice president of the Chicago-based Devon Bank, a Jewish-owned bank providing Islamic financial products through its branches. “They may serve some of the same functions, but there’s a legal difference between the two, in terms of inheritance and taxes.”
Kalair states “We have over 150 Muslim organizations in Canada who have worked with us in marketing Islamic finance. We have over 100 financial institutions that we have met to discuss Islamic finance products. We have been able to structure Shariah compliant financial products with Credit Union Central of Ontario, Metro Credit Union and McMaster Savings and Credit Union. All our products are within Canadian laws and required no changes in the law as we have communicated our products with Ministry of Finance, OSFI, OSC, FSCO and CMHC. Currently we have serviced close to 500 households however we have a current waiting list of 5,000 households.”
“Other governments have encouraged the development of Islamic Finance with the US Treasury Department appointment of a Scholar in residence for Islamic Finance, establishment of Islamic Finance Project at Harvard University, Dow Jones Islamic Market Indexes and Britain PM Gordon Brown speech at a London Islamic Finance conference wanting to “make Britain the global center for Islamic finance”. Today we have two US banks offering Islamic Financial products in Detroit and Chicago and LloydsTSB offering Islamic Financial products across 2000 branches in Britain.”
“We don’t see Islamic financing ghettoizing the Muslim community. There would be no reason to assume when today we have banks in Detroit and Chicago offer Islamic mortgages at par to the Muslims community through its branches.”
We urge the CMHC to proceed further with their study on Islamic mortgages which will be openly shared for all Canadians to analyze. Islamic mortgages have been operating in Canada for over 25 years.
A copy of the letter was sent to Jim Flaherty, Minister of Finance and Monte Solberg, Minister of Human Resources and Social Development who is responsible for the CMHC.
It has structured Shariah compliant banking deposit products with McMaster Savings and Credit Union. UM is the Canadian representative on two of the largest Islamic Finance associations: Islamic Financial Services Board (IFSB) based in Malaysia and Accounting & Auditing Organization for Islamic Financial Institutions (AAOIFI) based in Bahrain.