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Sharia-compliant mortgage lender in receivership
By Susan Pigg | 2011/10/18 18:08:00
UM Financial Inc., a Toronto-based firm that offered sharia-compliant mortgages to Muslims, has gone into receivership leaving more than 173 people fearful they may lose their homes.
UM Financial was one of the first companies in Canada to offer so-called Islamic financing to Muslims who believe that sharia, or Islamic law, prohibitions against usury include interest on things such as mortgages.
UM would buy a property then lease it to a client so they were paying rent instead of interest. Some homeowners complained that the firm would also charge extra fees.
The company had $50 million in financial backing from Central 1 Credit Union of which almost $29 million is outstanding.
Qayum Mian knew he was paying a premium on his Markham house for the seven years he used UM Financial — he estimated up to 2 percentage points more than if he’d gone through a bank — but was happy to pay the price “because my conscience was satisfied.”
Tarek Fatah, a long-time critic of the lending practice and founder of the Muslim Canadian Congress said Tuesday he’d had calls from a dozen concerned homeowners.
Those clients “have rights and they have obligations, and those are unchanged,” said Michael Creber, a partner with court-appointed receiver Grant Thornton Ltd.
He urged affected clients of UM Financial and its sister company UM Capital Ltd. to call the receiver at 416-607-2693.
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