Thank you for your interest in American Finance House LARIBA, the Oldest CommunityOwned, Riba-Free and Shari'aa

Compliant Finance Company Serving the Community in the US since 1987. The following is a summary of our approach to home financing which is also used for financing cars and business equipment: 1) The primary differences between us and Riba banks are the following: a) We do not Rent Money. We approach each transaction as an investment (using the Declining Musharaka of Usage Model) instead of Lending. We advise you as to whether the transaction is a good investment or it is better to rent. b) We never start from an interest rate to calculate your payment. Your payment is based on the market rental value of the property you are seeking to finance. The rental value is determined by mutual agreement between you and us. c) We do not sell/transfer the relationships for a quick gain. This allows us to work with clients in a humane and fair way in times of trouble. 2) Our home financing (and refinancing) is based on the Declining Participation in Usufruct (DPU) (Declining Musharaka) concept. The following is a brief Summary of the LARIBA Model: a) LARIBA conceptually purchases the property jointly with the client. LARIBA would authorize the client to act as its agent (wakeel) to select, negotiate the price of, and purchase the Property. b) LARIBA authorizes the client to undertake the purchase of the property from the vendor and record the title (register it) directly into his or her name. Client becomes the owner of title to the house or owner of Milkul Raqabah. LARIBA retains its share of the usufruct - Haqul Manfaaa. c) Out of its own free will, the client offers to buy and LARIBA accepts to sell its share/units immediately at the same price. The value of the sale is paid in monthly installments over a period of time up to 30 years without adding any interest. The monthly payment is called REPAYMENT OF CAPITAL (RofC pronounced rofsee). d) LARIBA and Client agree to perfect a lien[1] (implied co-ownership) on the property in favor of LARIBA. LARIBA agrees with the client to
[1]

Please note that some mis-translate the word lien as Rahn (in Arabic it literally means pawn). In a Rahn situation the ownership and the right of use of the property is arrested completely like in case of pawning a watch for money. In a lien, the right of use is not arrested and the ability to share the right of use is also allowed.

share in the income realized from the use of the house based on the actual rental value as measured in the market. With this lien, the client and LARIBA share the income from the lease of the property proportionately between them. This income is called Return on Capital RonC -pronounced ronsee. As the client pays back his or her Riba Free Loan - dayn, this progressively reduces LARIBAs share in the usufruct (Haqul Manfaaa) as well as increases the clients share gradually to reach 100% at the end of the Financing Period. e) In order to make sure that money is not rented at the interest rate of the day which is RIBA, we research the actual market fair rental value of the property in its geographic location. The client and LARIBA officer each research the market to find how much a similar property leases for in the same market of the property to be financed and present three documented estimates each (a total of six estimates). Sources of rental value estimates include leasing agents, real estate brokers, News paper advertisements and online resources. The goal is to obtain the rental value, per square foot based on similar properties. The client and LARIBA compare their findings and agree on a rental value to be used in our proprietary model. PLEASE NOTE THAT EACH TRANSACTION IS DONE AS A PURCHASE FINANCING NOT A LEASE. 3) Other Features of the Program: a) Our financing allows clients to enjoy the tax advantages of traditional real estate financing while avoiding the Riba aspects. b) The repayment terms are structured to fit your cashflow needs with payback periods of up to 30 years. c) We can accept down payment as low as 5%. Please note that if down payment is less than 20%, you will have to purchase Private Mortgage Insurance ("PMI") until your equity in the property reaches 20%. d) You can buy back our share at any time by making additional payments. 4) We use the standard legal documentation required by law and we supplement them with the LARIBA Agreement which documents the process we used to calculate the payment and the rental value agreed upon. We do not switch the words of interest to rent or profit to make the transaction appear Riba-free.