An interesting article on an alternative home financing organization:
Ameen Housing Cooperative, founded in 1986, has helped 22 families buy homes in Silicon Valley and one family buy in Sacramento through a rent-to-own plan that avoids interest but still allows the cooperative to make a profit, in keeping with Quranic law.
A key distinction with Ameen’s form of finance is that, unlike a traditional mortgage company, the cooperative shares risk with the homeowner. If a home’s value increases, they both profit. But if the home loses value, they both take a loss.
And while Ameen addresses interest payments versus affordability, we can’t help but wonder if a similarly structured program wouldn’t make more sense, and be more efficient, than the city’s current “Below Market Rate” (BMR) program.
∙ Islamic co-ops create happy homecomings [SFGate]
∙ BMR Guidelines (San Francisco) [SFGov.org]
These guys have it both ways. They don’t want to pay interest, and yet they petition the IRS to consider the “rent” as interest allowing them to take a mortgage interest deduction.
For its faults, the BMR program is about “affordable” housing. SFGov sets income restrictions, the price of the unit and may provide downpayment assistance.
The program described in the article is a financing program.
http://www.sfweekly.com/2009-11-25/news/screwed/1
check out this article re: greedy BMR owners suing the city.