Federal housing regulator Bill Pulte on Thursday responded to reports of Sharia-compliant mortgage loans purchased by Fannie Mae and Freddie Mac.
Pulte says Fannie and Freddie don’t give out sharia-compliant-loans.
Guidance Residential, a private Islamic home-financing company, publicly states that it brings Freddie Mac and, according to another passage on its website, Fannie Mae, into its transactions as investors.
The company describes its product as “Islamic co-ownership financing.” Instead of issuing a conventional interest-bearing mortgage, Guidance says it purchases a home alongside the buyer. The buyer then gradually acquires the company’s ownership share while paying for the use of the remaining share.
Guidance says the arrangement was constructed to satisfy Sharia principles prohibiting riba, or interest. It also claims that its Sharia board and 18 law firms developed a contract under which Freddie Mac can participate without purchasing conventional debt.
Hellbound and Down 