Islamic Financing with Guidance Residential

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Unlock the mysteries of Islamic mortgage and financing with our special guest, Hussam Qutub, Senior Vice President and National Sales Manager for Guidance Residential. With a passion for real estate that started in his youth, Hussam takes us on his intriguing journey into Islamic finance, sharing how it aligns homeownership with ethical and religious beliefs while tackling the complexities of the current housing market. This episode promises a wealth of knowledge on how Islamic finance institutions uniquely operate in contrast to traditional banking systems, aiming to help communities build generational wealth while staying true to their faith.

Our conversation with Hussam deepens as we navigate the principles that distinguish Islamic financing from conventional methods. We discuss the concept of riba, the challenges Muslims face when securing financing that aligns with their beliefs, and how Guidance Residential offers innovative solutions like using LLCs for property co-ownership. By the end, you’ll gain a comprehensive understanding of how these financial practices not only respect Islamic laws but also address ethical considerations in banking and investment.

Moreover, we explore the strategic efforts to ensure that Islamic financing is accessible and understandable to diverse communities across America. From multilingual support teams to educational resources tailored for all ages, the goal is clear: empower everyone with the knowledge to make informed financial decisions. Tune in to learn how Hussam and Guidance Residential are helping reshape the landscape of home financing for Muslims in America, ensuring that no one has to choose between their faith and their financial future.

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Episode Transcript

Speaker 1 (00:02):
Assalamu alaikum, welcome to Difficult
Conversations where we tackletaboo topics in a safe space
through empowerment andeducation.
Assalamu alaikum everybody,welcome back.
We are back for another seasonand I will be your host, abshiro
, and I'm Bonnie, and I will beyour host, abshiro and I'm

(00:24):
Bonnie.
Today we have an amazing guestwith us to tackle a topic that
you know we've been getting alot of questions on and there's
just been a general overallconfusion around, and that is
Islamic mortgage and financing.
So, to kick us off, I want tointroduce Hussam Qutub, who is

(00:44):
the Senior Vice President andNational Sales Manager for
Guidance Residential In his bio.
He did join the company in 2003, and he's in various other
roles as well helping thecompany in its early stages,
finding the guidance homeservices, creating national,

(01:04):
which is a national referralnetwork of real estate agents.
Before guidance, hossam workedat a senior consultant in
marketing and public relations.
He holds a BA in internationalsales from George Mason
University.
We are really excited to haveyou.
Welcome to our show.

Speaker 2 (01:21):
Thank you guys for having me.

Speaker 3 (01:23):
How is your flight here today?

Speaker 2 (01:26):
Uneventful, delayed by a couple of hours, but
otherwise smooth.

Speaker 1 (01:29):
Alhamdulillah.

Speaker 3 (01:31):
Is this your?
This is?
Oh wait, it's not your firsttime in Minnesota, correct?

Speaker 2 (01:35):
No, no, I've been to Minnesota many, many times.

Speaker 3 (01:37):
You should move here.

Speaker 2 (01:39):
Summers are great.

Speaker 3 (01:41):
Summers are great.
Yeah, if, yeah, I mean we onlyhave summers or construction,
those are our two seasonsConstruction, yeah, no, it's
winter construction and thenfall, yes, summers, yeah, yeah.

Speaker 1 (01:53):
Yeah, that's what I meant to say.

Speaker 3 (01:56):
So tell us a little bit about yourself, like are you
, are you where?
Where do you reside?

Speaker 2 (02:01):
And I live in Northern Virginia.
That's a suburb of WashingtonDC.
This is where I grew up.
For a few years I lived in thedistrict in the nation's capital
, but then, when it was time toget married and have children, I
ended up moving back out toVirginia.
So it's a town called Vienna.

Speaker 1 (02:23):
Have you heard of it?

Speaker 2 (02:23):
Yeah, it's a wonderful little town.
It's beautiful.

Speaker 1 (02:26):
Did you always want to be in this?
What you're doing currently inlike mortgage and finance and
stuff like that?

Speaker 2 (02:34):
You know it's an interesting question.
I honestly didn't know if I wasgoing to be in this specific
realm because I wasn't educatedas a young child on this
specific industry.
Meaning Islamic financing isn'tsomething they teach you in
school.
But real estate and housing ingeneral I took an interest in a

(02:58):
long, long time ago as a youngchild.
I would go to my parents and Iwould say this house is for sale
, that house is for sale.
Everything was in newspapersback in those days, and so the
Sunday paper had all these homesand I wanted them to purchase a
farm.
So I would literally cut thesethings out.
Let's go to the open house.

Speaker 3 (03:16):
That is so beautiful Like?
Or are you into farm animalsand stuff?
I was into horses.

Speaker 2 (03:20):
So, I really wanted to raise horses.

Speaker 1 (03:23):
Oh well, speaking of housing and housing market, um,
in your opinion, how do youthink the housing market is
doing?

Speaker 2 (03:31):
well, I think in general there is a shortage of
inventory.
That's a fact.
It's been that way for quitesome time.
I think it's been that way forabout a decade and a half and um
.
But if you looking at themarket, and my philosophy is
owning a home.
If you're moving into thismarket to buy, as long as you're

(03:54):
not in it for the short term,it's never a bad decision.
It's actually a very gooddecision.
It's a decision that enablesyou to create generational
wealth and, to me, beats rentinganytime.

Speaker 1 (04:10):
Yeah, my dad used to say, like all the time he's like
he'll always tell me, like howmuch do you pay in rent?
And I, you know, tell himbefore I bought the house.
And he'll be like then he'llcalculate it by 12.
And he's like you're justthrowing that money away.
You know that right.
You're like you're just takingit to the garbage and you're
burning it.
And so he was like one of themain reasons he was pushing all
of us to buy and stuff like that, which isn't always easy.

Speaker 3 (04:34):
Easy or possible for a lot of people now, especially
with this economy that we have,yeah.
But I wanted to ask a littlebit more about, like, your
journey to guidance and yourjourney into financing.
So you said that you were intofarms and you wanted to get you
know a horse, and I guess.
So how did you get, how did youfind your way, I guess?
Or your home and guidance.

Speaker 2 (04:56):
Well, I, you know, of course, I went to college and
then after, right after at theend of college, I started
looking at different careeropportunities.
I wasn't sure what I wanted todo.
I joined a law firm for a shortperiod of time, thinking that
if I get that experience itcould open a whole new world for
me, to be able to maybe go backand go to law school and those

(05:16):
kinds of things.
But what I learned was enough topush me in a different
direction, and that was more inthe business consulting realm
direction, and that was more inthe business consulting realm
and that opened my eyes to avariety of different clients,
different industries, andthrough that experience I
actually became a lot more awareof kind of housing and the need

(05:39):
for home ownership.
I came across some people thatactually knew about guidance.
It had just started about eightmonths prior to my meeting with
them and they were the onesthat really kind of influenced
me to kind of make that change.
I had met one individual at abusiness luncheon in Washington

(05:59):
DC and he had left MorganStanley to join this
organization and said to me thatI should really take a look and
learn more about it.
And so I did.
After several meetings I wasreally my intent was to try to
make guidance a client of mine.
Oh.
But then I actually met thefounder of the organization, dr

(06:24):
Mohamed Hamour, and that had aprofound impact on me and really
helped me see the vision ofwhat he had in mind.
And it was a hundred yearvision to create an Islamic
finance institution, a globalone.

Speaker 1 (06:37):
So at that time, how did the Muslim community look in
the United States and what werethey doing in terms of home
ownership?

Speaker 2 (06:47):
Well, it was right on the heels of 9-11.
So the community was kind of umin this state of fear and, um,
and of course the media didn'thelp for the most part, Um, so
there was this instability, Ithink unease, within the
community about you know where'sour place in America,

(07:09):
especially for those who arefirst generation or immigrants,
and so there's nothing likeputting roots down and making
you know your state, home andyour future here, home and your
future here, and so, um,understanding that and
understanding kind of what isgoing to help American Muslims

(07:30):
down these next few decades, and, and I think it's really kind
of institutionalizing ourbeliefs, institutionalizing
especially in the financialsector, um, and recognizing that
home is here, not necessarilythere yeah, yeah, putting roots
down here.
Um, investing here, uh,investing not just in real

(07:54):
estate, but investing in yourchildren's future, education,
and so on and so forth, iscrucial and so, um.
That is tough for muslims whenthere's only riba-based options.

Speaker 1 (08:06):
It's very, very tough .

Speaker 2 (08:08):
I went to college and I had to take student loans.
There were no options.
So there's just one sacrificeafter the next.
But you have to get throughthem and you have to understand.
Okay, what could be better formy children, my children's
children?

Speaker 1 (08:33):
Go ahead have to understand, okay, what could be
better for my children, mychildren's children.
So to kind of bring us into it.
You know, I know that there's alot of confusion on the
different types of, you know,home financing and what's
acceptable Islamically.
Can you just kind of go throughwhat those are and what are
things that guide?
Where does guidance come in?

Speaker 2 (08:48):
Yeah, you know, prior to 2002, when guidance was
launched, most Muslims inAmerica who are paying attention
, at least you know went withthe fatwa that was issued by an
international scholar.
His name is Qardawi.
That fatwa was about darura andabout in times of need, when

(09:10):
there are no options, you canpursue a conventional mortgage
to own a home, but that's onlyif there are no options.
Yes, so now, after 2002, whenguidance was launched, the
option became available forMuslimslims in one state or
another.
There's still states that don'thave these options.

(09:31):
Minnesota has the option, ofcourse, and um, but um, the.
The key differentiator nowbecomes okay, is it competitive?
Is it I going to qualify?
And if so, then why don't Ipursue this and what is the
difference here?
So there's an educationalongside this and really the

(09:53):
biggest challenge of our last 22years in business has been
education Education in what ribais why it's haram, what are the
alternatives and how are theyhalal?
So those things are not taught.

Speaker 1 (10:10):
they're not taught at the masajids, unfortunately I
think the only thing that istaught at the masajids is the
fact that riba is haram and notnecessarily like the different
types, because I know, like whenmy husband and I were, you know
, buying a home, it was a lot ofself-education kind of going
through.
Like you know, you have themrabahas and like the ijara

(10:32):
types and all that stuff.
So with this, I guess, lack ofinformation, what would you?
What is the first thing youknow was a priority for guidance
in trying to educate thiscommunity.

Speaker 2 (10:48):
Well, when I joined, one of the things we learned was
, even within our organization,as we were hiring individuals
that maybe understood thefinancial part of it or you know
the financial qualificationaspects of it, didn't quite
understand how to explain orrelay what is riba and why it's

(11:10):
not permissible, and how is ourstructure permissible.
That was a challenge.
So what we did is we embarkedon the creation of a white paper
, a very simple white paper thathad frequently asked questions,
so it was a two-page,three-page summary and then
about a dozen questions and westarted circulating that

(11:33):
internally and then circulatingit to imams and the feedback we
received from many imams wasincredible.
Many of them thanked me when Iwould visit because they needed
this level of information thatthey did not study per se.
Because an imam if you reallythink about their role, they are
like if you compare it to, forexample, a physician they're

(11:56):
your general doctor.
They know the basics, they knowhow to, of course, marry people,
provide khutbahs, some wisdom,advice, counseling Unfortunately
you know even funerals,conducting those and such.

(12:16):
But when it gets to adiscipline within Islam, like
Islamic financial transactionlaws, the muamalat of that type
of transaction, you have to goon and study that there's a
curriculum involved and thereare scholars that specialize in
this space globally.
So educating even our imams waspriority number one and then

(12:40):
moving on to the community, ofcourse, through those imams and
community leaders, and thenmoving on to the community, of
course, through those imams andcommunity leaders.
But it began with that simplelet's create a document and then
let's layer more on top, andthen eventually this was 2002.
So the internet wasn't such abig of a marketplace as it is
today.
So eventually we layered invideos long videos, short videos

(13:08):
, whatever attention spans.
People had to be able to absorbwhat we were kind of trying to
educate them on, and that's key.
I think that is very, veryimportant, because I think we
were talking earlier trying toexplain it to even your children
, for example.
You cannot make them read awhite paper.
They won't last past the firstpage.
Yeah, yeah, so you have toexplain it in terms that are
essentially simplifieddigestible and so it is a

(13:32):
complex.
Finance in general is complexas it is, and then you layer on
islamic financial transactionlaws and those become complex.
But today for your, I'm goingto try to simplify it to the
best of my ability so that it'ssound bites that they can take
home and really digest.

Speaker 3 (13:53):
So I want to kind of step a few steps back and a step
away from guidance to Islamicfinancing in general.
If you had to, like we saidlike, if you had to explain
islamic financing and how it'sdifferent from um, conventional
financing to a fifth grader, howwould you do it?
And um, you know, aksharmentioned the two types and kind

(14:14):
of, just because there arepeople that haven't even gotten
to that level of exposure yeahyeah so um kind of to put the
burden on you.

Speaker 2 (14:23):
Well, you know, in the Quran, this is where we are
taught kind of many things butriba.
It's brought up in the Quranvery explicitly and there's a
verse in Surah Al-Baqarah whereit says those who take unlawful
interest will stand before Allahon the day of judgment as those

(14:43):
whose minds have been corrupted.
They say that commerce is justlike interest, but Allah has
made commerce lawful and hasforbidden interest, so even
during the Rasul sallallahualayhi wa sallam's time, even
during his time, people wereconfused.
So it's okay that we're confused.

(15:04):
People were confused.
They would say commerce is justlike interest.
There's no difference.
But there is a difference, andthat main difference hinges upon
lending money.
The loan.
The loan itself in Islam, asdescribed by many scholars in
this space, is at the heart ofthis issue.

(15:25):
It's a contract, and so acontractual lending agreement is
permissible in Islam, but ithas a place, and that place is a
charitable act.
Charity it's meant to helpthose who are experiencing
hardship, so that you are ableto support them, help them, but

(15:47):
not take advantage of them.
So that's where a loan contractbelongs.
It does not belong necessarilyin investments, commerce, profit
Correct, okay.
And so this isn't new, by theway, the prohibition on lending
money at interest spans evenbefore Islam.
It's prohibited for Christians,for Jews.

(16:12):
It's in their books, it's clearin their books that it's
prohibited.
Do not lend money at interestto my people in Exodus, for
example.
And so there is that essentialsort of key point to understand.
So then, why right?
The question is why, and whatare our options?

(16:35):
You mentioned some contracts.
There are contracts that arepermissible for facilitating a
purchase or anything of thatnature.
They're all the common theme ofIslamic financial contracts, is
the cornerstone, I would say,of these contracts is ownership

(16:58):
by the financier.
Whoever the financier is, musthave ownership and loss sharing
of some sort in the asset,whatever it may be.

Speaker 1 (17:03):
Which is also.
Is that the same thing as risksharing?

Speaker 2 (17:06):
Yes, Okay, that is correct.
Okay, and so ownership is key.
Okay, if you do not ownsomething, you cannot sell it.
If you do not own something,you cannot rent it.
You cannot make money off ofsomething you do not own.

Speaker 1 (17:20):
Okay, so then would that be a double contract?
So like you like the bank.
Okay, so then would that be adouble contract.
So like you, like the bank, say, has the house first, has to
own it and then turns around andsells it to me, so that
essentially it's one transactionhere and then the second
transaction with me.

Speaker 2 (17:40):
I can go buy a car, buy it for $5,000, refurbish it
and sell it for $6,000.
That's halal.
Yep, I could even sell it toyou.
On installments, let's say$1,000 for six months, that's
halal.
There's nothing haram aboutthat.
Okay six months.

(18:01):
That's halal.
There's nothing haram aboutthat.
But if I was to loan you $6,000or $5,000 and charge you so you
can go and buy the car andcharge you interest to repay me,
that's haram.
So, contracts are crucial.
They're crucial in this aspect.
Now I'll explain why.
Number one money in Islam hasno intrinsic value.
Value it's not regarded assomething of a, of a product
okay that you can sell.
So money has no intrinsic value.

(18:23):
You can't create money frommoney.
You cannot create money frommoney.
If you were able to createmoney for money, those who have
will take advantage of those whodon't, and the cycle of poverty
and as we see now, as you seetoday and there's many, many
problems with the world today asa result of the monetary system

(18:43):
.
You have inequality, risinginequality, rising debt, rising
poverty, rising unemployment.
Um, and this is a direct uhresult of the way the financial
system is structured, where I'llgive you a simple example.

(19:03):
Today, everybody banks.
There may be people who puttheir money under their mattress
.
I understand it's not the safestroute, but you take $100 and
you deposit it into a bank thebanks.
Today there's something calledfractional reserve banking and

(19:24):
what they do is this is part ofthe banking system they take out
90% of that deposit.
So you're depositing your moneyfor safekeeping.

Speaker 3 (19:37):
So is that for savings or checkings?

Speaker 2 (19:39):
Savings or checkings, so you're putting it in the
bank for safekeeping so that youcan access it whenever you want
, but the bank will tell youit's safe While you look away.
They'll take 90% of it and loanit out through credit cards,
car loans, business loans and soon and so forth, and then the

(20:02):
person who receives that creditnow uses it to buy something.
When they use it to buysomething so imagine $100, they
just received $90 on theircredit card.
They go to buy something withthat $90.
The person who sells them theservice or the product deposits
that $90.
Where did they deposit it?
In the bank.

(20:22):
The bank takes that 90 and takesagain 90% of the 90 and
circulates it out again andagain, and this cycle continues
and continues, by the way, tothe point where if everybody
went to the bank today to pulltheir cash out, it wouldn't be
there.
We know this.
This is the vicious cycle ofthe fractional reserve banking

(20:44):
cycle.
Now, the problem with that isthis First, they're loaning that
money out to someone andcharging them interest.
Haram number one there's ribabased on that contractual
relationship.
Yeah, and now you're, you'reparty to that because it's your
money so sorry can I go ahead?

Speaker 3 (21:03):
yeah, I just want to ask because, um, like, um, I'm
just going to talk about myself.
So for us, um, me and myhusband had made a decision not
to put any money in our savingsbecause we are.
We didn't want to get interest,so we thought like we would be
safe, which is the reason why Iasked the first question if is
it savings and checking is thesame thing, and most people, I

(21:26):
feel like, do the same thing,which is they put whatever money
, that they want in theirchecking account so that they
don't get interest on it.
But then yeah.

Speaker 2 (21:36):
We do the same thing.
I do the same thing.
I tell the teller if I ever goto the bank um don't bother
pitching me on savings on anaccount that's supposed to give
me returns.
I know you may think I'm crazy,but I don't want the returns
yeah and a lot of muslims, I'msure, do this.
Um, because, number one, it isreturns based on lending at

(21:58):
interest.
Number one and number two, youreally don't know what they loan
the money to, who they loan themoney to, and for what?
because assume, assume the worst, because it can't happen.
The bank lends it to a liquorstore.

Speaker 1 (22:12):
The bank lends it to a casino the bank lends it to
some dealer, the bank lends itto something Arms dealer or
whatever.

Speaker 2 (22:17):
Whoever can qualify from a credit profile
perspective will receive thosefunds.
I mean as long as they're legal.
Yeah.
But I wouldn't want to be partyto some things.
These are my hard-earned fundsthat I put in the bank.
So there's ultimately a problemwith that, and so one of the

(22:39):
things about our organization iswe're not a bank and we're not
a subsidiary bank.
We're not owned by any banksand we're the only Islamic
finance institution in theUnited States that is not owned
by a conventional bank.

Speaker 1 (22:53):
So where does the funding, the capital, come from?

Speaker 2 (22:57):
So our founders are a 60-year-old private equity
group.
Two Muslim families, namely aSyrian family from Syria,
originally started theorganization in Syria and
Lebanon and is headquartered now, today, in the United States,

(23:20):
in Washington DC.
So these investors, theseMuslim investors, made a
conscious decision in 1999 toback one of the investors' sons,
dr Mohamed Hamor, to back himin this new venture.
And it was going to be amonumental feat, because there

(23:44):
wasn't such a thing at the timewhere there was a standalone
Islamic finance institution nottethered to a bank.
And so it took three years,millions of dollars, 18
different law firms law firms inthe housing industry of the
United States, working withFreddie Mac and Fannie Mae's

(24:07):
legal divisions because theyneeded to understand that if
we're going to do this, we wantthem to securitize these
musharaka structures.
And so, after three years andafter all that painstaking work,
we're able to launch the firstmusharaka, which is a declining
balance co-ownership program foramerican muslims to purchase.

Speaker 1 (24:30):
Can you explain that a little bit, because I think,
um, yeah, what, what themusharaka is, and yeah so so
there's Musharraqah is an Arabicword for partnership, and
traditionally people think ofMusharraqah, or partnership, as
joint enterprise.

Speaker 2 (24:46):
But there's actually two types of partnerships in
Islamic financial transactionlaws.
There's joint enterprise andjoint ownership for the purpose
of transferring ownership.
So joint enterprise is verysimple enterprise and joint
ownership for the purpose oftransferring ownership.
Okay.
So joint enterprise is verysimple.
It's if you open up a businesstogether, whatever that business
may be, you share equally 50,50 or 75, 25 in the expenses and

(25:09):
in the profits.
It's not that type ofpartnership.
Why.
Because we wanted to haveMuslims be able to take
advantage of all theappreciating value that real
estate has to offer over time.
We wanted that to go 100% tothem when they purchase a house.
So the scholars at the time,the board of scholars that
worked on this project for threeyears, went with something

(25:31):
called Shirkat al-Milk, which isa form of musharaka that is
joint ownership.
It comes from inheritance laws.
So if parents pass, the childrenbecome partners in the assets
that the parents leave behind,Automatically partners and now
have to make a decision of whowants to be liquidated, who

(25:52):
wants to keep the property livein it, and so on and so forth,
and those decisions are doneover a period of time or a term
where one occupies and isresponsible for the costs, but
the other one's being bought outand also compensated for having
a portion of their inheritanceused by the other person

(26:19):
inheritance support used by theother person.
So in this case we purchaseproperties together with our
customers through what's calleda co-ownership commitment
agreement.
That's the difference.
There is no lender agreement,so we actually bring our money
by the creation of an LLC foreach property and that
establishes our ownership.
So let's say it's $90,000 for$100,000.
I know finding $100,000 is themost impossible in the US today.

(26:41):
But let's take that as a simpleexample.
So you bring $10,000 of yourown money and we bring $90,000.
We can go up to, by the way,$97,300.
So 3% down and so on and soforth.
But if we do $90,000, we bring$90,000 and we establish our
ownership in the propertythrough the creation of an LLC.

(27:02):
So the LLC owns 90%.
It's a guidance LLC and thecustomer owns 10.
Now the agreement, theco-ownership commitment
agreement.
It's very simple you pick theterm 30 years.
You want to buy us out in 30, 20, or 15, you decide.
You can buy us out in shorterperiods of time at any time, but
you want to establish atimeline because we don't want
to be co-owners for life, and soin that term, you agree to buy

(27:26):
us out each month while alsopaying us for using the portion
of the property that we've givenyou exclusive use and enjoyment
of.

Speaker 1 (27:34):
So is that one contract between you or two
separate contracts?

Speaker 2 (27:38):
One contract Okay.

Speaker 1 (27:40):
Because I know that that's been a little bit of a
confusion versus if it's onecontract just between you and
guidance, or two separatecontracts where we are partners
but then at the same timethere's also a separate rental
agreement as well.

Speaker 2 (27:55):
No, the co-ownership commitment agreement is the sole
contract.
It is the heart of that stackof documents that you have to
sign at closing.
If you've ever been to aclosing and the majority 95% of
the documents are government,required disclosures Okay, have
nothing to do with therelationship, it's just mandated
disclosures.
But, when you get to the heartof what really counts, it's the

(28:18):
co-ownership commitmentagreement, which is completely
different than if you were tosit at a Wells Fargo or
traditional banks closing.
The heart of their agreement iscalled the lender agreement,
where they're affronting you,the funds, and they're not
taking any ownership.

Speaker 1 (28:34):
They're stepping back from that the other aspect of
it is the whole risk sharingthat we talked about earlier,
and so, in this regard then, howwould guidance share in the
risk with me as the borrower?

Speaker 2 (28:51):
That's a great question.
So we just, you guys didn'texperience it here in Minnesota,
so we just you guys didn'texperience it here in Minnesota
but we just had a hurricaneevent recently come hit the US
through the southeast.
Many homes were destroyed byfloodwaters and so on and so
forth.
So that's a trigger event topotentially having the contract

(29:12):
dissolve because there's no morehome.
If it's destroyed, we don'tco-own anything together anymore
, right?
Except whatever's left theparcel In those situations
natural disasters or eminentdomain.
Eminent domain is if thegovernment decides they want to
expand a highway, a school, andthey take, so you're being

(29:33):
forced.
So these are trigger eventsthat are not caused by either
one of us in this partnership.
If there's loss due to theseinstances, we share pro rata
equally in that loss.
So if it's a $100,000 loss andlet's say the example is we're
90% owners, again 10% is thecustomer and the insurance

(29:53):
company after the loss says well, you didn't have flood
insurance because it wasn't aflood zone, but the house was
destroyed by a flood and theycut you a check.
The proceeds equal $60,000 or$70,000.
Less than we would take thatamount and divide it 90%, 10%,

(30:13):
okay, 90% 10% Okay.
There is no other financialinstitution in the United States
, no other, even Islamicinstitution in the United States
that would do such a thing.

Speaker 1 (30:25):
So then, sorry, go ahead.
So then so in the contract thecustomer is still required to
take out the insurance on theirbehalf, or does guidance carry
that insurance?

Speaker 2 (30:37):
So property insurance taxes, as well as maintenance,
is all the responsibility of theconsumer.
Okay.
Reason being based on thescholars' evaluation of the
contract is Wouldn't that be anunfair risk sharing model?
Well, so the consumer number onebenefits personally from, let's

(31:03):
say, maintaining the propertyand the actual taxes.
Taxes go to localmunicipalities, schools and law
enforcement, paving of the roads, shoveling the snow and so on
and so forth.
The person occupying theproperty benefits from that
Maintaining the property.

(31:24):
You're living in the propertyto maintain it, you benefit.
You maintain the property, theproperty value increases, you
receive the full amount of theincrease.
So in both cases, yes, I thinkthe benefit goes directly to the
customer.
With the case of insurance it'sgood that you asked we actually
do share in one portion of thatinsurance cost and that's up to

(31:47):
the customer to actually selectthe program where we share
versus the program where theytake it on themselves.
There is the brick and mortaritself, the house itself, and
then there's personalpossessions.
When you take out homeowner'sinsurance, you really have an.
You have essentially a, a, um,a bundle package of things.
You have the uh hazardinsurance, which is the case of

(32:10):
people slip and fall on yourproperty.
You have the actual brick andmortar and then you have the
actual brick and mortar.
and then you have personalpossessions which is your, you
know, your tv, your couch.
So guidance does offer theability to take on one of those
insurance with you the brick andmortar.
So you have an option at thetime to actually pick one of the

(32:34):
programs that shares and one ofthe program that is priced a
little bit differently, thatdoes not share.
The reason why we gave theoption to the consumer is
because if you take an insurancepolicy and you begin to
unbundle it, insurance companieswill raise their prices, making
it extremely expensive.
So what we learned is it's notadvantageous necessarily for a

(32:56):
consumer to unbundle these andsay, okay, I just want my
personal possessions and hazardsseparately and the brick and
mortar part of the insurance I'mgoing to share with guidance.
Well, your premium skyrocketsat that point.
So we've had to create aworkaround to try to help the
customer make the decision ontheir own.
To create a workaround to tryto help the customer make the

(33:19):
decision on their own, you canselect one program that actually
does that, unbundled it, or aprogram that has it all where
it's bundled and you pay for it,but you're saving significant
amounts of money on thatinsurance policy, and what we're
doing is we're essentiallylowering by a bit our pricing
our pricing for utilization.

Speaker 3 (33:37):
I like to do comparisons because I feel like
conventional, like financing, isso much common now and people
are so familiar with it, right,and I'm asking this like because
I don't know exactly, and ifyou don't it's fine, let's say,
cause we were talking about how,like, let's say, there's a
flood and then you know, becausethe person didn't have flood

(33:58):
insurance, they got only, youknow, a portion of their money
to cover.
In conventional, the bank stillexpects you to pay for the
amount that you owe, correctthat?

Speaker 2 (34:10):
is correct.

Speaker 3 (34:11):
Regardless of how much the insurance is covering
or not.
Yeah, so you might end up withno home.
Half the insurance covers foryou and then the rest will come
out of your pocket.
Is that my understanding ofconventional ways?

Speaker 2 (34:23):
That's correct.

Speaker 3 (34:24):
And then with guidance, whatever the insurance
decides, you guys do those andthen wash your hands and walk
away.

Speaker 2 (34:30):
I mean, it's not a theory, it's actually been
practiced for us.
We had a hurricane hit Houstonyears ago, devastating hurricane
, and many of these homes werenot even in flood zones, they
didn't require flood insurance.
But the stormwaters came in andthey were such where they
destroyed the homes using flood.
We took the loss alongside withthem, pro rata.

(34:52):
Now, the reason whyconventional mortgages don't
function the way we function isbased on one thing the contract
they use.
They use a loan agreement, sowhen you're using a lender
agreement, it's very simple,right.
I'm loaning you $90,000.
You just pay me back atinterest.
What happens between?
You and the property.
It's none of my business.

(35:13):
It's not my problem.
It's not my problem and that'sthe danger of lending money at
interest.
I mean, in 2007, the mortgagecrisis, what we had on our hands
was a record amount ofdeficiency judgments to people
who were underwater, to peoplewho basically couldn't afford to

(35:33):
make their mortgage payments,and they turned in their keys
their keys to the bank and saidit's yours, I can't make the
payments anymore and I can'tsell it because it's.
The price got reduced to apoint where it's below, below
what I originally borrowed fromyou.
That didn't go away.
What happened after that?
There's a.
There's a.

(35:54):
There's a great article in thewall street journal about this,
where, in the state of Florida,for example, there's such a
thing called recourse and it'sin many, many states around the
country.
The majority of states have theability for lenders to have
recourse should you default thecourts and had deficiency

(36:15):
judgments issued against all ofthese folks who turned in their
keys, maybe even left the state,started their lives over, where
, at that point, a year, two,three years later, a sheriff
showed up, knocked on the door,served them with this deficiency
judgment that said you stillowe the bank on the home from
three years ago and there'scompounding interest, late

(36:37):
payments accrued.
So this is devastating for manypeople, but it's the long arm
of the of the lending game andso, islamically, we have not no
recourse.
Uh, in all 50, in all 34 statesthat we operate in, we would if
we went to 50, because thecontract inherently doesn't have

(36:58):
a lending borrowingrelationship built into it and
if, if something that happens,we would walk away with a loss
as well.

Speaker 3 (37:06):
So so I was cause I the whole time you were speaking
, I was thinking about okay,let's say, for example, um, one
of the big um, I guess,deterrents for people is that
you know, now that you said,okay, so this is a pro of
guidance, or not just guidance,but maybe like um fine and

(37:27):
islamic finance, and then thisis the con of um, conventional
finance, correct.
But one of the things is that Ifeel like, to a certain degree,
maybe this is a myth and if itis, please dispel that there's a
lot more options for people indifferent credit brackets when
they go through conventional,for example, fha and so on and

(37:48):
so forth.
So how does Islamic financing,or even specifically guidance,
how does that accommodate peoplethat might have, you know, the
capital but not necessarily thecredit?

Speaker 2 (38:01):
It's a great question .
So people ask us do you checkmy credit rating, do you check
my obligations, my debts and soon and so forth?
And we say, yes, what is credit?
For example, it's basically anumber.
Right now, we know it as anumber, right.
For example, it's it's it'sbasically a number right now, we
know it as a number, right.
But even during the time of therasul sallallahu alayhi wa

(38:21):
sallam, people, before they didbusiness with anybody, they
would ask the community aboutthat person and whether or not
they met their obligations.
So, um, it's credibility.
So are you credible in meetingyour obligations?
So today we have a number on it, but back in those days they
would ask the community andyou'd have, essentially, a
reputation.
And so, for us, we do look atcredit.

(38:44):
We do have to understand wetake on more risk than
conventional banks and even wetake on more risk than other
Islamic banks because they aresubsidiaries of banks and so
they are resolved to thatessentially.
For us, we do have sort ofoptions based on your credit

(39:08):
rating.
We try to work with you.
So if your credit is so farbelow it, it doesn't even meet
the minimum requirement.
We have essentially aneducational process where you
will receive from us, month inand month out, education around
how to improve your creditwithout taking on debt, without

(39:32):
going and actually paying itabout.
So there's all kinds of thingsyou can do to improve, but we
would need you at a certainminimum threshold, which is.
Which is it varies depending onalso it's not just your credit
score, but it varies on how muchdebt you also have.
Your debt to income ratio.
I think what?

Speaker 3 (39:52):
I sorry.
What I was going to say wasthat one of the cons, the
catch-22s for most Muslims thatare very strict on ruba is that
sometimes they don't even havecredit right Because they don't
have credit cards, they don'thave any mortgages, and so on
and so forth.
So I guess I ask you it's likea cycle You're trying to avoid,
the interest.
You're trying to avoid theinterest and therefore, you

(40:14):
don't have credit, but you needcredit to be able to get it.

Speaker 2 (40:18):
It's a misconception.
It is a big misconception thatyou can't build your credit
because you don't want toparticipate in a Dibba.
Explain that.
Yeah, understand, getting acredit card and actually swiping
it for your groceries that youwould normally pay cash for.

(40:40):
Swiping it for gas that youwould normally pay cash or
through a debit card.

Speaker 1 (40:47):
Using it for your daily expenses and then, before
the month is over, paying it alloff builds your credit yeah, I
will say that, um, some peoplelike will even say the fact that
, because I've had theseconversations with people and
there'll be, like, even the merefact of having a credit card,
because you're signing acontract saying if I don't pay

(41:08):
within the 28 day cycle, I willpay the interest Just that fact,
you know, kind of discouragesthem from getting a credit card
period which is kind of yeah.

Speaker 2 (41:20):
I think it's a discipline issue.
So as long as you'redisciplined with your expenses,
you can even set it on a timer.
Like you can make sure that youavoid the interest by making
sure you have payments goingfrom your checking to that
credit card automatically forthe exact amount yeah, because
look um borrowing, you'reessentially borrowing the money

(41:42):
at zero interest.
Yeah it's within 30 days yeah,so keeping that in mind, we also
take into consideration, ofcourse, you know, leases so if
you're leasing a vehicle thathelps build your credit because
you're meeting an obligation andleasing is halal.
There's nothing wrong withleasing a vehicle um so I think
I want to um.

Speaker 1 (42:01):
We're kind of running um kind of low on time as well,
but I want to transition intoum.
Earlier we talked about, youknow, credit rates and stuff
like that for the for the muslimcustomer, and also um.
The down payment, which is alot of feedback that I've gotten
, is that it's a lot higher thanconventional banks, which might

(42:22):
require like 5% versus 20% thatthe Islamic financing requires.
Why is that?
And the other thing is theoverall loan or amount that the
customer pays back to theseMuslim companies are a lot
higher than a conventional bank.
Is that true or is that a myth?

(42:44):
Okay, yeah.

Speaker 3 (42:46):
Sorry, it's a lot We've heard.
You know Islamic financing is alot more expensive, and why
does it feel that way to certainpeople?

Speaker 2 (42:56):
So number one, the minimum down payment requirement
for guidance.
I won't speak on behalf ofanyone else here, For us it's 3%
.
Okay so it's not 20% that somepeople think, or 15% or anything
like that, so it's 3%.
And we even have we work withdown payment assistant programs

(43:19):
throughout the country.
Okay, we work with many here inMinneapolis.
In fact, we just launched newrelationships with new down
payment assistant programproviders that we're unveiling
today as we speak.
So I would encourage engagementto learn more and understand,
and I have to say we are againnot a bank, not a subsidiary of

(43:44):
a bank.
The reason I make that point iswe're always going to be
limited to certain things bydesign and by choice.
So we're not apologetic for it,because if we were to affiliate
or tether ourselves to a bankjust to open up the options, the
dilemma with that is, once I dothat, I'm engaging in some sort

(44:08):
of riba or another.
There's no way around it.
When you are a subsidiary ofone of those banks, you actually
are governed by banking lawsnumber one, and that means banks
are prohibited from owning realestate, and so you become
prohibited from actual ownership.

Speaker 1 (44:25):
I didn't know that.

Speaker 2 (44:27):
They are prohibited from owning real estate in the
United States, with theexception of two scenarios For
their branches, they can owntheir branches and when they
foreclose on your home, they canown it for a short period of
time and that's all.
So co-owning with you in theonset of an agreement is
prohibited and if you are asubsidiary of one of these banks

(44:48):
, you essentially have given upthe one of the two major
cornerstones of islamic finance,which is ownership.
And I will say to a lot ofmuslims out there, muslim
americans who want to make an aconscious effort to learn more
and understand be vigilantbecause, um, if you ask the

(45:08):
question, are you?
owned by a bank.
To many of our competitors outthere, the answer will likely be
yes, and that puts intoquestion whether or not they
meet that criteria of ownershipfirst.
And then comes the criteria ofrisk sharing, and in many cases
we've looked at those contractswith lawyers because you have to

(45:29):
go into the minutiae andunfortunately the loss sharing
isn't quite there as well.
So by design, we have chosennot to affiliate or tether
ourselves to banks, because itwould result in the removal of
what we're trying to actuallyremove.

Speaker 1 (45:49):
Yeah, yeah.

Speaker 3 (45:50):
I have so many questions.

Speaker 1 (45:54):
I know we need like two hours, oh my gosh, so I
guess.

Speaker 3 (45:58):
So we've been talking a lot about the new homeowner,
right, let's say, for example.
Now my question goes for thehomeowner that kind of went with
the conventional way or withanother finance Islamic
financing I noticed on yourwebsite, um, on guidance's
website, that there is therefinance option.
Can you tell us a little bitmore how that works exactly in

(46:20):
the Islamic financing context?

Speaker 2 (46:22):
absolutely so.
Uh, if you're currently with aconventional mortgage, um, we
can absolutely help you get outof that mortgage.
We've done it for thousands andthousands of muslims.
Um, it works this way.
So you currently have a debtobligation to a bank.
Let's say, and let's say thatdebt is ninety thousand dollars
on a hundred thousand dollarhouse, right?
Um, just to keep it simple, sowe would come in and we would

(46:45):
actually pay that off with thefunds that we're bringing our
funds, and with those funds,well, first we would actually
appreciate the house.
We need to get a properappraisal of the house value at
that time so it could haveappreciated.
So maybe that hundred is nowall of a sudden, uh, 200 or 110
or whatever, but thatestablishes now the baseline

(47:08):
value of the home.
And then, if the debt is$90,000, that establishes the
percentage of ownership now inthe home.
We would essentially pay thatoff.
So that goes away, making usnow owners in the house at that
dollar amount, which mayrepresent 90% or less if the
house appreciated, right.
So then that creates thecontract with us, establishes

(47:32):
our percentage of ownership atthat time, the term you'd want
to buy us out for 30 years or 15or 20, and your monthly
payments based on the rate, andI'm sorry to cut you off, but is
the percentage of ownership?

Speaker 3 (47:46):
is that dependent on anything that's going on in the
housing market?
Like you know how it sayscurrently the interest rate is
six percent, seven percent orwhatever.
Is it dependent on that or isis it stagnant in a specific
like you guys make a decisionevery year to have this kind of
percentage of ownership.
Therefore, that's how you, orif let's let's say, for example,
someone that has now, it seemslike, 5% of the low interest

(48:10):
rate, like, let's say thatsomeone that has a home mortgage
with a 5% interest rate whenthey want to refinance with you
guys, how would that work?
Like, I guess, in a way.

Speaker 2 (48:20):
I think you're referring more to the cost.
Yeah.
The ownership is establishedwith our cash coming in and
establishing.

Speaker 1 (48:26):
It's like decreasing yeah, the more payments you make
, their ownership goes down,your ownership goes up.
That's different than I feellike the profit rate and that's
the confusion a lot of peoplehave.
Is that, just because you callit a profit rate, what's the
difference between an interestrate and that?

Speaker 2 (48:44):
Yeah, that's a great question.
We get that question all thetime.
Well, so our profit is madefrom the customer using,
actually having exclusive useand enjoyment of our portion,
not the whole house, the portionof the house that we own yes
which is declining each month.
So actually you're paying eachmonth less and less of a

(49:07):
utilization fee we call itprofit, but equates to a
utilization fee for usage.
Now what's the differencebetween that and a conventional
loan?
So just because the numbersmight equal the same amount
doesn't mean they represent thesame thing.
Meaning, if our rate today forutilization is 6% and the banks

(49:32):
are charging 6% on money thatthey actually loan out, it
doesn't make our contract all ofa sudden a riba contract.
This is an important aspect to,I think.

Speaker 3 (49:41):
It's a different paradigm.
It's a completely differentparadigm.

Speaker 2 (49:44):
So it's a great question.
So when we were developing theprogram during the R&D phase,
when we finished structuring theMusharrak Motalaqasa and
ownership declining and theirownership increasing, we asked
the Sharia board what should wecharge for usage for them using
our portion of the property?
And the response was this isnot a Sharia question.

(50:05):
You can charge whatever youwant to charge.
If you charge too much, you goout of business.
If you charge too low, you goout of business.
If you charge too low, you goout of business.
So you need to be competitive.
So they mentioned somethingcalled benchmarking.
It's traditionally approved inIslamic financial transaction
laws from the Sharia perspectiveand all it says is you can look
at who is facilitatinghomeownership in the marketplace

(50:26):
and these are the lenders.
They're facilitatinghomeownership through the
marketplace and these are thelenders.
They're facilitatinghomeownership through a lending
agreement and charging a cost toloan money.
That's a cost and you canbenchmark your rental payment
right or whatever you're goingto charge for rent in this case,
against that cost.
So benchmarking is acceptable.

(50:48):
A simple example tobenchmarking is this this was
brilliant.
I heard it that I'm gonnaregurgitate if I was to go out
to a you know grocery store andI see a bag of potato chips and
you know we can eat potatoes asMuslims, no problem.
But if you read the ingredients, and they're fried in lard, no,

(51:09):
no we can them.
No, we can no longer eat them.
We have to put that bag down,no matter what the cost is.
It's 99 cents a bag.
Whatever.
Tomorrow somebody comes intothe market and produces potato
chips that are fried invegetable oil.
Now they have a predicamentwhat are they going to price at?
They're going to look acrossthe shelf and see that most

(51:29):
potato chips fried and lard, areselling for 99 cents a bag.
So if they sell at 99 cents abag, does that automatically
make them haram?
No no.
No, so it's not about the price.
It's about the contract andwhat you're paying for the
process.

Speaker 3 (51:50):
Yeah, I feel like most of the reasons just to go
back to that simple potato chipcomparison is that sometimes for
most people and I don't knownecessarily if it's true but it
feels like that potato chip ifit's 99 cents for the large one,
of course, taking into accountthat's haram right.

(52:16):
The vegetable potato chips feelslike it's a lot more expensive
than it's like compared to that.
I guess in a way is that likeif the goal is to make it easier
for the Islamic community toand I'm not saying you guys
shouldn't make profit, I want tomake a business major, so you
know I'm a business major.
So I you know, makes sense.
But if the goal at the end ofit all is to make financing and
home ownership easier for um forthe islamic community, how come

(52:41):
it feels like that?
You know, there's a bigdiscrepancy, um between the lard
and the vegetable.

Speaker 2 (52:50):
Yeah, in most cases we find ourselves right there in
line with what's out there.
From a pricing perspective, weliterally have a department, a
pricing department, thatmonitors rates three times a day
and then adjusts our pricingagainst usage.
So the usage fee gets adjustedand gets alerted to the account

(53:13):
executives that work for usabout two or three times a day,
and from my vantage point I knowthere's myths out there, but
from my vantage point thereality is we're very
competitive, we're extremelycompetitive.
Now you may pay an extra forgot with guidance uh fee, which
is you may or may not have heardof it it's our llc fee.

(53:36):
So we created an llc for everysingle property that we finance
in the united states toestablish true ownership in that
l, in that property.
Through that llc there's a costto actually run an.
Llc, manage it, administer itonce a year.
The state of Delaware isprobably wondering who in the
world is this Muslim ownedcompany buying?

(53:57):
tens of thousands of LLCs right,but the LLC is actually not
just establishing our ownership,it's actually establishes
protections for our consumers.
If you think about it, if Ico-own with you and I co-own
with you and I co-own with40,000 Muslims and someone slips
and falls in your home and suesyou and recognizes that they

(54:18):
have a partner, you have aco-owner.
They can come after me and allof our co-owners around the
country.
So, it's actually protectionsfor all of our co-owners and
it's also protections for you,because if someone was to take
on a frivolous lawsuit againstguidance, they'll be able to
maybe go further and go afterthe homes.

Speaker 1 (54:42):
So to kind of pivot a little bit so after you've been
living in the home, you knowyou're in a partnership with
guidance.
Does Guidance ever sell thatdebt?
Because I know that some of ourfriends have said after they've
gone through some of theseIslamic banks, after a couple of
years they'll receive a lettersaying this is a notice that

(55:04):
your debt has been sold toFreddie May Is that ever the
case?

Speaker 2 (55:09):
First of all, based on the contractual agreement
between us and all of ourconsumers, this isn't a debt.

Speaker 3 (55:15):
Okay, or they're part of the ownership, so it's
financing that's in the property.

Speaker 2 (55:23):
Now, that agreement, our co-ownership commitment
agreement, is a revenueproducing agreement.
Right, there is actually arevenue being generated.
So one of the things that Ihelp clarify for folks is the
secondary market and how itworks, and this is a little bit
deep and I hope that I won'tlose you.

(55:43):
So it's an aspect ofsecuritization.
Securitization is a key aspectof homeownership.
So you've heard of the nameFreddie Mac and Fannie Mae.

Speaker 1 (55:51):
Yep.

Speaker 2 (55:52):
Freddie Mac and Fannie Mae are not banks and
they don't loan money.

Speaker 1 (55:55):
Or did I mix up the names?
That's okay Freddie Mae orwhatever.
Yeah, you know what I'm talkingabout.

Speaker 2 (56:01):
Yes, the Fannie and Freddie the sisters.
Yes, yep.
They actually are, are notbanks and they actually do not
loan money.
They're prohibited from lendingmoney.
So what do they do?
They were established byCongress to allow foreign
investors to actually invest inhousing in the United States
because there's not enough moneysitting in depositories in the

(56:23):
United States banks to supportfunding for housing in the
United States.
It's a trillion dollarrequirement for that every year.
So they were actually createdto be the middlemen to pool
these mortgages into somethingcalled mortgage-backed
securities and they would offerthese securities 500 million

(56:44):
security at a time or so toforeign investors.
And I'll give you an examplepension funds.
I don't know if you know muchabout pension funds.
But teachers, for example, arepart of pension funds.
So let's say, a pension fund infor the teachers union in
France.
They there's a fund manager sothat those teachers have their
pension when they actuallyretire.

(57:05):
They have to manage those fundsand they have to invest them in
something.
One of the things they investin is US mortgage-backed
securities, because Americanstend to pay their debts right,
they tend to pay, and so theactual return is a safe return,
so to speak, for that pensionfund manager.
Freddie Mac and Fannie Mae makethose possible.

(57:26):
But when they actually engagewith guidance, what are they
looking at?
They're looking at co-ownershipcommitment agreements.
So what they're doing isessentially seeing revenue, risk
and revenue.
And our revenue comes from what?
Utilization fees?
So what we do is we sell therevenue rights to Freddie Mac
and Fannie Mae.
So that they can open it up andshare it with pension fund

(57:50):
managers and other internationalmanagers who want to invest in
the US housing market.
Now they don't know, thatthey're getting halal returns,
but all they do is essentiallypull these and create securities
.
Sukuk is actually permissiblein Islam?

Speaker 1 (58:05):
Does guidance ever leave the contract between you
and the consumer?

Speaker 2 (58:10):
The answer is no.
And so that's a simple no, andthat's what people fear, I think
as guidance is going away.
Yeah.
What we do is we sell therevenue rights essentially to
Freddie Mac and Fannie Mae, butwe are the servicer.
It's called in the industryit's called servicing rights.
Okay.
We maintain servicing of ourcontracts forever.

Speaker 1 (58:28):
Okay For as long as the contract Until maintain
servicing of our contractsforever.

Speaker 2 (58:30):
for as long as the contract Until the term, until
the term Okay.

Speaker 1 (58:31):
So the customer will always, because the LLC is
registered with who it'sregistered with us, okay, that
claims this, that state Okay,because yeah, because afterwards
, like you, you, you don't seethe bank and I'm not saying I
don't have any experience withguidance, but with other ones
that I do have experience withuh, you don't even like your

(58:54):
payments, don't even go to them.

Speaker 2 (58:55):
Yeah, your payments will go to guidance every month.

Speaker 1 (58:58):
You'll get a statement from guidance.

Speaker 2 (59:00):
Okay, you'll get um instructions to you know.
Cut a check.
If you still use checks toguidance residential Um, now we
can hire administrators to sendthat on our behalf and if we do,
we have to alert you.
That's part of the process, soit's called sub servicing, so
it's an administrative task.
So we do hire a company thatliterally just takes our mailers

(59:23):
, our our envelopes, our printsout our statements, sends it on
our behalf and then collects thepayments on our behalf, Because
if you did it in-house it costsmore and that cost ends up
going where.
To the consumer.
So we outsource it just atleast so that we can keep our
costs down.
But you'll always be dealingwith guidance residential.

Speaker 3 (59:46):
So we're running out of time, so I wanted to kind of
just give you an opportunity,like an elevator pitch, to why
guidance and not the others well.

Speaker 2 (59:59):
So I think we make a conscious decision to avoid
dribba um, and it is a um.

Speaker 3 (01:00:05):
It is a decision that's rooted in our faith so
are you saying the other Islamiccompanies might not?

Speaker 2 (01:00:12):
Well, here's what I would say If you're going to go
and make this conscious decisionto please Allah, subh'anahu Wa
Ta-A'la, to rid the biggestpurchase you'll ever make in
your life the roof over yourfamily's head, if you're going
to remove riba out of it, youshould take the time to do some
research.
I urge everybody to do so, andI mentioned at the top of the

(01:00:34):
hour that there are certainrequirements.
We brought seven of the world'sleading scholars to ensure that
this is done correctly.
We did that over a course ofthree years.
We took the time to actuallyengage and engage and engage to
the point where it costs us moremoney, to the point where, when

(01:00:55):
we launched, we wereessentially the only institution
that is not tied to theRiba-based banking marketplace
in the United States, and thatcomes with a lot, a lot of pain
and challenges.

Speaker 1 (01:01:17):
Yeah, essentially you're an outlier, we are an
outlier, Our costs are higher.

Speaker 2 (01:01:21):
Everything becomes a lot more challenging for you as
an institution when you're nottethered like that.
So the most important thing, Ithink think, is to make sure
that if you're going to makethat decision, you made the
right decision.
You didn't make the decisionbased on just the cheapest in
the marketplace.
I think pricing matters, butwhen you're looking at pricing,

(01:01:41):
you want to make sure you're notalso diluting the authenticity
of the structure.
That is to be pleasing to Allah.
Second thing I would say is,when you do engage in home
financing and I hope it's withguidance you'll recognize that
we are a Muslim-ownedinstitution through and through
Meaning.
When you finance your home andwe make a profit, that profit

(01:02:06):
gets circulated within theMuslim American circular economy
.
It does not go in to line thepockets of bankers who will do
what with it.

Speaker 1 (01:02:15):
Loan it out.
Loan it out or probably open upanother banking branch and
another banking branch, andthat's what's happening
essentially with directcompetitors.
So where can people find you ifthey have any questions, or
just you know where can theyfind?

Speaker 3 (01:02:29):
you, you guys have a Minnesota, I know you guys have
a minnesota, I know you guyshave a minnesota base.
Uh, where would that be?
Also?

Speaker 2 (01:02:34):
we do um, so online they can find us at guidance
residentialcom.
We also have a youtube pagethat has a lot of videos that
are short and can helpcrystallize the information.
Uh, we are actually opening upan office today.
It's our inauguration of oursort of first day, or October

(01:02:56):
1st it was in the Zawadi Centerin Bloomington, minnesota, so
our office is there now.

Speaker 1 (01:03:04):
Oh, is that by the Dar Faruq Masjid?

Speaker 2 (01:03:07):
It's in the south.

Speaker 1 (01:03:09):
I think I remember hearing about that, yeah.

Speaker 2 (01:03:11):
Yeah, it's a growing community, yeah there's a wadi
community center is reallyprofound.
It has a coffee shop, arestaurant offices, a banquet
hall.
So we're gonna, we've, we'veessentially, uh, moved our
office to that location and itmakes it, I think, very, very
comfortable for people to comevisit with us, talk about their
options, go grab a cup of coffeeand even maybe have lunch or

(01:03:35):
dinner in the center.
But online,guidanceresidentialcom.
We have a number of differentsocial media feeds Facebook,
twitter.
What else is out there?
Tiktok Are you guys on TikTok?

Speaker 1 (01:03:47):
Yes, we are.
We're on all of those, Are youguys?
Last question Um, um, what elseis out there?
Uh?

Speaker 2 (01:03:49):
Instagram.
Yes, we are, we are.

Speaker 3 (01:03:52):
We're on all of those , are you guys?
Uh, last question, and I justwant to, for people that are, uh
, you know, maybe not, englishis not their first language and
you know how do you guys have,um, employees that are you know
either?
In the Somali community in theautumn has a large Oromo-Somali
Ethiopian community that are youknow that are interested, that

(01:04:14):
are in Islamic financing To helpwith the education part of it.

Speaker 2 (01:04:18):
Absolutely.
We have over 50 licensedaccount executives in our
organization.
I mean our organization is 200strong, but 50 are licensed to
actually work with our consumerson this program and they speak
so many languages.
I think the last time wecounted was over 20 different
languages amongst the 50 thatare spoken.

(01:04:38):
Of course, Somali here isspoken by at least three of our
associates and other languagesas well.
I know we have some reallytalented account executives who
speak at least three or fourlanguages.

Speaker 1 (01:04:51):
That's amazing.

Speaker 2 (01:04:52):
So we're always prepared to help you know,
bridge the gap of communicationin any way we can, and if
someone's not here that speaksyour language, they're likely to
be in our corporateheadquarters in.
Northern Virginia or somewhereelse.

Speaker 1 (01:05:07):
Awesome.
Thank you so much.
All right, thank you.
This has been DifficultConversations.
Join the conversation in thecomment section or on our
Instagram page to share with uswhat you think.
We do not have all the answersand our biggest goal is to kick
off and get the conversationgoing.
May Allah accept our effortsand use us as catalysts for

(01:05:30):
change.