Fannie to Invest in Islamic 'Mortgages'

Fannie Mae and the American Finance House LARIBA, Pasadena, Calif., have announced a commitment by Fannie Mae to invest $10 million in home financing contracts that are acceptable under Islamic law in order to enable more American Muslim families to buy homes.LARIBA has developed a housing finance model incorporating an agreement between itself and the prospective homeowner that sets jointly negotiated maximum monthly payments based on the property's sale price and fair rental value, thereby marking the property to the market. The model, available in 29 states, is based on the actual market rent of a similar property in the neighborhood. "Many American Muslim families have stayed out of the housing market for years because they are not allowed by Islamic law to pay, receive, or be charged interest," LARIBA founder Yahia Abdul-Rahman said. Freddie Mac announced a $1 million investment in such home financing contracts in March 2001. Fannie Mae's website address is http://www.fanniemae.com, and LARIBA's is http://www.lariba.com.