The article linked below contains a brief explanation of Shariah-Compliant mortgages here in the US…

Shari’ah compliant mortgage financing has been available in the United States for over a decade.  Research into how these mortgages are structured reveals the details behind this Islamic finance program and how it differs from the standard FNMA mortgage loan documents.

The loan documents used in a Shari’ah compliant mortgage transaction are identical to a conforming conventional (FNMA) loan package, with the addition and amendment of a few disclosures in the closing package that assure the borrower (the Consumer) that the financing he has obtained is a valid Diminishing Musharakah and is Shari’ah compliant.  In a Diminishing Musharakah, a financier (Co-owner) participates with the client (Consumer) in the joint ownership of a property or equipment.  For instance, a homebuyer has twenty percent to put down on the home purchase and he forms an arrangement with the financier (Co-Owner) which lends the remaining eighty percent.  As the Consumer makes payments his ownership percentage increases.

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