Perils Of Islamic Banking ?

Sharia mortgage racket fails, leaves 200 Canadian Muslim families in limbo


And will leave the infidel credit union in debt. via Court begins hearing Islamic bank dispute – Toronto – CBC News.

The financial dispute between an Islamic bank and about 200 families whose mortgages are in limbo, moved to a Toronto courtroom on Thursday.

The homeowners had interest-free mortgages with United Muslim Financial totalling about $32 million.

Since 2005, UM Financial has offered loans and mortgages to people who want to adhere strictly to Islamic (Shariah) law, under which no interest can be charged on a loan.

The court will now decide what to do with those mortgages.

UM Financial was ordered into receivership on Oct. 7.

“At this time our main focus is to work with all stakeholders to ensure that the legal and moral interests of the families affected by this case are protected,” said Afroz Kapadia, spokesperson for the group United Muslim Homeowners.

The court-appointed receiver, Grant Thornton Limited, says it is facing challenges getting key documents from Omar Kalair, the head of UM Financial.

The receiver claims UM Financial, “purchased $2.1 million of precious metals (silver and gold) in the weeks leading up to the receivership order” and that “proceeds of approximately $2.1 million were paid to UM Financial’s Shariah board.”

The receiver also claims “Omar Kalair has failed to disclose the location of assets.”

Muhammad Heft — one of the homeowners — sat through the hearing, also convinced UM Financial isn’t being upfront.

“In our community we have to have the highest standard of ethics and Shariah banking is not just a document it’s a behaviour, it’s a communication, it’s an organization of a company and I think this one failed miserably,” he said.

The lawyer representing Omar Kalair said his client won’t be making any statements to the media.

More:

Central 1 Credit Union provided financing for UM, which in turn charged a fee for providing mortgages — a sum higher than what borrowers would usually pay at market rates — in lieu of interest on home loans.

Some devout Muslims are willing to pay these fees, and the credit union and UM then split the profits from the fee.

But earlier this year, Central 1 started an application to put the UM portfolio into receivership, saying it didn’t have confidence in UM’s business model or ability to pay money back.

In September, Central 1 pointed to a number of instances in which payouts owed to it from UM from discharged mortgages were delayed or not paid at all, and successfully applied for UM to go into receivership.

Instead of getting clear answers from UM, they’ve been given conflicting information.

Omar Kalair, the founder and CEO of UM Financial, did not want to be interviewed by CBC News, but released a statement saying Shariah compliant products are “still an important and growing business.”
Omar Kalair declined to be interviewed by CBC News.

Omar Kalair declined to be interviewed by CBC News

But on Oct. 6, a day before the court put the company into receivership, Kalair wrote a letter to his clients announcing his resignation and to say “we have terminated our investment in your home for the first mortgage,” with little additional information on what clients should do.

“We thank you for your business over the years,” Kalair wrote, and included in the package two $5 Tim Hortons gift cards, a prayer mat and an English version of the Qur’an.

Kalair’s letter to clients was accompanied by a note from the Multicultural Consultancy Canada Inc. (MCC), a body that provides guidance to UM on matters around Shariah financing. Mufti Yusuf Panchbhaya informs UM clients that his Shariah board has issued a religious opinion, also known as a fatwa, stating the mortgages with UMFI to be “null and void according to Shariah principles.”

And in typical fashion, an attempt to fleece the kufr:

“They’re telling us don’t make your payments, but from a legal aspect we don’t know how that would impact us as well if all of a sudden we’re in default. You know, could they take the house away from us?” he said.