All Forum Posts by: Rameez Balagamwala

@Abdullahi Mohamed @Osman Khan

Yes, investment residential real estate. 15% down payment. 
you cannot do BRRR completely since shariah law doesn't allow one to acquire a cash loan with interest, so cash outs are never an option. A possible alternative to cash out is to sell the property to your family member, so that the property stays in the family and the equity is accessed.

Final Update: 

Closing happened smoothly once the lender updated their guidelines: three months of payments since the end of deferment is considered current. The only effect of the CARES forbearance was that the file did not qualify for PMI, lender said they tried three vendors and couldn't get one to approve, forcing 20% down.

All in all, this worked out in my favor.  

@Ben Tilbury I am not sure, but their websites should list all their services. I have personally only dealt with UIF, and they do deal with commercial properties. Do update on what you find out; may need this info some day. 

@Ben Tilbury, 

I have used UIF Corporation for multiple mortgages. 

These are the five sharia-compliant lenders I know of:

1) UIF Corporation (https://www.myuif.com/)

2) Guidance Residential (https://www.guidanceresidential.com)

3) Ijara CDC (https://ijaracdc.com/)

4) Lariba (https://www.lariba.com/)

5) Devon Bank (https://www.devonbank.com/fait...)

My family and I have gotten over 10 mortgages with University Islamic Finance for home and investment properties. You don't have to be Muslim to use this lender, by the way. 

The main difference is that you don't borrow "money ", but instead buy the property from the lender over 360 payments, and the price of the property is marked up - this is the "profit" they charge. You have the rights to sell the property, and the remaining profit will be waived. Mathematically, it is equivalent to traditional financing. 

The main difference is: you can never cash-out your equity with this contract. The only way to cash out your equity is to sell the property. 

I can't think how hard money can be sharia compliant.. sharia restricts money from being a commodity: any added risk must accompany added value. 

Dec 3rd 2020

I took the CARES forbearance as it was presented as a completely benign "national emergency" special option, that it will be a deferment/modification which doesn't impact my credit at all. Took this for three months (May, June, July).

Now, in December, while trying to purchase another rental, at the last minute I was told to "pay off the deferral". I was more than happy as I now have cash reserves - only to find out that the loan servicers says "GSE loans are not allowed by Freddie Mac to pay off the deferral amounts". Underwriters won't approve until I pay it off. There's no way out of it for me now. 

The Loan Officer says this has been escalated to the higher management for their discretion, as we have many files pending disapproval only for this reason. 

Still waiting on their decision.. will update here once I hear from them. 

Another interesting detail: Two months ago, I refinanced one of the properties I had the deferral on, and it went through without issues. 

FYI: I have 800+ credit, very good income. and more than enough cash reserves. 

My salary's been cut 50% due to forced furloughs, and tenants in the service industry have lost jobs. 

This is what my mortgage management company sent:

Freddie Mac is allowing us to offer a 3 month forbearance plan of reduced payments. If you are unable to make any payment we can do a suspended payment. During the time of the forbearance plan credit reporting is turned off and I have attached a snip it of the credit reporting section from the letter we send for this offer.

Following the completion of the forbearance plan there are a few options of bring the account back into current standings.
-Reinstatement (all past due delinquent amount paid as one lump sum)
-Repayment plan (past due delinquent amount spread out over up to 12 months)
-3 month trial plan followed by a modification (rate will stay the same but the maturity will be extended out only as many months needed to keep your Principal and Interest payment where is was or slightly less)

***Credit Reporting will remain off during repayment plan and trial plan. We will only turn it back on once the account is in current standings again.

I am leaning towards the 3rd option - which one would y'all take? 

Rookie tax-law question: two of my family members swapped the names in the titles of their homes with each other, using an attorney, with "warranty deeds". The names on the mortgages stayed the same. Later, one of the properties was rented out.

Now, how to handle the taxes? The person whose name is on the title will have to claim the rental income in taxes, but cannot show the mortgage expenses? Gross income becomes net?

Concluding this after 3 months: I have gotten the loan and am living in the property now. 

Here's what I learned: The underwriter wanted to ascertain that I will move out of the current property to move into the new one.  The rental income, which is the main motivation, was perhaps not convincing enough. In the letter, I wrote four bullet-points, listing (1) Good Investment, (2) Better Location, (3) Safer for Children (4) Rental Income. 

All the reasons listed were honest, however the fourth reason was 95% of the decision. 

-Rameez