I believe that in the "Muslim system", if you buy a house with the interest-free loan then you have to pay rent on the house so it is not as cheap as you might think.
It isn't 'free loans to Jews'. If all goes well, the bank gets the amount of benefit, they just cannot call it 'interest'. They do that because of some kind of religious rule.
LendCo advances a loan of £100,000 to Mr A Borrows for a 12 month term with interest of 5% per annum. 50% of the loan, or £50,000, is treated as a repayable interest-free loan, and 50%, or £50,000, is an investment into Mr Borrows’s real estate business. Mr Borrows would be required to pay profits from the investments to LendCo at a rate of 10% of the investment portion per annum. This results in Mr Borrows paying £5,000 to the lender per annum, as investment profits, equivalent to paying 5% interest on the loan.
I think it is. I read a bit of the fine print. Those more schooled in these loans can educate me if I've misinterpreted this. However...
What I see is this:
Specialized mumbo jumbo word salad 'rules and requirements' added into the Lenders agreement for these types of 'special loans' makes it sound like they are complying with statutory lending laws, and NOT OFFERING PREFERENTIAL TREATMENT TO ONE CLASS, by finessing the particular words in the mortgage loan paperwork.
The alleged 'mutual investment' verbiage in the end, result in a near zero percent interest rate charged from the J to the J. And, any profit or gain is directed right back to the one who purchased the property and took out the loan. The J lender gets nothing back financially in order to satisfy the heter iska under Torah rules.
(This is my take, anyway...)
How can they afford this, you ask?? They make up for it by charging the Goys outrageous interest bordering on usury.
Example:
LendCo advances a loan of £100,000 to Mr A Borrows for a 12 month term with interest of 5% per annum. 50% of the loan, or £50,000, is treated as a repayable interest-free loan, and 50%, or £50,000, is an investment into Mr Borrows’s real estate business. Mr Borrows would be required to pay profits from the investments to LendCo at a rate of 10% of the investment portion per annum. This results in Mr Borrows paying £5,000 to the lender per annum, as investment profits, equivalent to paying 5% interest on the loan.
"Parties to a Heter Iska typically execute two sets of documents. A Heter Iska is executed to make the transaction permissible from a halachic viewpoint, while traditional promissory note and mortgage are executed to allow the lender to protect his rights in the event that the borrower defaults, and is unable to meet the burden of proof required under the Iska."
"An Iska also contains a nominal ‘management fee’ paid by the Investor to the Recipient for managing the Iska investment. It is typically a one dollar payment, or in the alternative, an extra share of the profits that the Recipient receives for his services. In the typical case that the Recipient does not actually prove the level of profits or losses but rather pays the agreed upon ‘buyout’ fee, the management fee is built in to the settlement amount."
Sounds like lots of loopholes exist in the 'rules'.
Yep, its all optics to fool their God, while still charging being able to charge interest to other Jews.
So interest becomes investment. Investment comes with risks. So additional documents to get rid of the investment. Ultimately its exactly the same as interest payment, but without having to call it an interest.
I don't know if this is real but if thousands of us apply for it tomorrow it will cease to exist.
I could put on a funny hat for two hours....
Heter Iska is real. IIUC, it's a kind of loophole to get around the Talmud's rule against Jews collecting interest from Jews
It also says rocket can sell the loan at any time to anyone
I think its technically interest free but the lender collects a fee in a different way.
Muslims give interest free loans to Muslims, Jews give interest free loans to Jews.
I believe that in the "Muslim system", if you buy a house with the interest-free loan then you have to pay rent on the house so it is not as cheap as you might think.
It isn't 'free loans to Jews'. If all goes well, the bank gets the amount of benefit, they just cannot call it 'interest'. They do that because of some kind of religious rule.
LendCo advances a loan of £100,000 to Mr A Borrows for a 12 month term with interest of 5% per annum. 50% of the loan, or £50,000, is treated as a repayable interest-free loan, and 50%, or £50,000, is an investment into Mr Borrows’s real estate business. Mr Borrows would be required to pay profits from the investments to LendCo at a rate of 10% of the investment portion per annum. This results in Mr Borrows paying £5,000 to the lender per annum, as investment profits, equivalent to paying 5% interest on the loan.
I dont think this is interest free. Just a restructuring so that "interest" become "investment"
I think it is. I read a bit of the fine print. Those more schooled in these loans can educate me if I've misinterpreted this. However...
What I see is this:
Specialized mumbo jumbo word salad 'rules and requirements' added into the Lenders agreement for these types of 'special loans' makes it sound like they are complying with statutory lending laws, and NOT OFFERING PREFERENTIAL TREATMENT TO ONE CLASS, by finessing the particular words in the mortgage loan paperwork.
The alleged 'mutual investment' verbiage in the end, result in a near zero percent interest rate charged from the J to the J. And, any profit or gain is directed right back to the one who purchased the property and took out the loan. The J lender gets nothing back financially in order to satisfy the heter iska under Torah rules.
(This is my take, anyway...)
How can they afford this, you ask?? They make up for it by charging the Goys outrageous interest bordering on usury.
Here is a very good explanation of Heter Iska with a concrete example:
https://patronlaw.co.uk/practice/heter-iska/
Yes, but...
"Parties to a Heter Iska typically execute two sets of documents. A Heter Iska is executed to make the transaction permissible from a halachic viewpoint, while traditional promissory note and mortgage are executed to allow the lender to protect his rights in the event that the borrower defaults, and is unable to meet the burden of proof required under the Iska."
"An Iska also contains a nominal ‘management fee’ paid by the Investor to the Recipient for managing the Iska investment. It is typically a one dollar payment, or in the alternative, an extra share of the profits that the Recipient receives for his services. In the typical case that the Recipient does not actually prove the level of profits or losses but rather pays the agreed upon ‘buyout’ fee, the management fee is built in to the settlement amount."
Sounds like lots of loopholes exist in the 'rules'.
Yep, its all optics to fool their God, while still charging being able to charge interest to other Jews.
So interest becomes investment. Investment comes with risks. So additional documents to get rid of the investment. Ultimately its exactly the same as interest payment, but without having to call it an interest.
Source
You can search heter iska to read about it. Rocker mortgage website has it listed here: https://www.rocketmortgage.com/legal/disclosures-licenses
Gotta scroll a little