No. UIF is not a bank. UIF is a Michigan corporation and is not a “bank” for the purposes of state or federal law. UIF does not engage in traditional banking activities. For example, UIF is not authorized to engage in deposit/bank accounts with customers, and UIF is not FDIC insured. UIF’s purpose is to engage in financial transactions that are Shariah-compliant.
Our majority shareholder is a bank, but we do have other outside minority shareholders. And, to imply that UIF is a “bank” because one of its shareholders is an FDIC-insured bank is factually and legally incorrect. Banks often have subsidiaries such as insurance agencies and investment management companies, and these subsidiaries are not “banks” because of their status as the subsidiary of an FDIC-insured bank. Further, UIF has insulated its business from our parent bank to ensure that all of our products and business dealings are sharia compliant.
A conventional bank issues you a loan of money to buy a house, and then charges interest on the loan. This is not permissible under Islam because it is clear interest. UIF offers three different alternative financing models called Musharaka (Partnership), Murabaha (Installment Sale), and Ijara (Lease to Own). In any one of these models, UIF buys the property and sells it to you and you pay UIF a profit for using the property. There is no interest involved. UIF is simply buying and selling a house to you.
UIF’s goal is to provide its customers the lowest cost pricing structure in the Islamic finance industry. With that said our profit rate is determined by market conditions and the amount of profit our investors are looking to make on the transaction. We also track the mortgage industry pricing so that we stay competitive in the market. Please feel free to contact us and learn more about our pricing and payment programs.
There are two types of costs when you purchase or refinance a house. Financing Company charges and third party fees. Generally, third party fees comprise of property appraisal fees, credit report fees, recording fees, title insurance and other settlement costs. These fees vary depending on the State and County you are purchasing the property in. One of our experienced Financial Consultants can advise you on what your closing costs will be based on where you are financing the property.
With our home financing programs, you can put down as low as 3% of the purchase price. However, if you put down less than 20%, there will be an added cost, also known as PMI. This is charged to compensate UIF for the added risk of financing low down payment properties. The added cost is based on many factors, including the amount of down payment, credit score, term…etc. Your financing consultant can answer more questions on this topic and calculate this cost for you. UIF specializes in financing low down payment customers. Contact us and review your options before considering FHA (government) backed conventional loans.
If you are putting a down payment of 20% or more (10% for CA residents) you have the option to pay taxes and insurances yourself and a fee may apply. If you are putting down less than 20% you have to Escrow with us. UIF collects taxes and insurance on a monthly basis and pays the appropriate parties on your behalf. This insures that you are never in default due to a failure to pay taxes or maintain required property insurance.
Your mortgage payment stays the same until the contract is paid off in full. If you make a large additional payment you will end up paying the contract sooner than the original term. Making extra payments towards your outstanding balance assures that you pay less profit to UIF over the contract term.
Yes! Since UIF sells the house to you, when you sell the property UIF no longer owns the property and thus does not share in the profits with you. You can sell the house whenever you wish and pay back the remaining principal balance at closing to UIF. With our program, the title is in your name from day one.
No. Your UIF financial consultant will coordinate all paperwork with realtors, title companies, and sellers. Since this is not a conventional mortgage, we have separate and different documents that need to be signed before and at closing. Rest assured — we will guide you throughout the process and close your file in a timely fashion.
Simple answer is YES. Federal law requires that we mail you a 1098-INT form that shows how much profit you paid us during the prior year. You can deduct this profit on your Income taxes. Please consult your accountant as there may be limitation on this deduction.
Yes, this can be taken care of by our sister company, Midwest Loan Services, who services all our transactions. For more information accessing your UIF home financing account online, please visit our customer center.
UIF works very closely with its customers in hardship situations. Our goal is to keep you in the house and work out a potential solution. However, if you cannot make payments and there is no resolution to this matter, UIF has the right to foreclose and take possession of the property.
There is a flat fee of $50 that is used to compensate for the cost of third party collection. We do not charge you an arbitrary percentage of your monthly payment as others may. This is paid to a third party company that makes collections on our behalf at the same cost to you.
Currently, UIF offers home financing in the following states:
Arizona, California, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin. Our home financing products are only available to finance properties in these states.
The Installment Contract is a contract signed by two parties that reflects the nature of the installment sale, which is the sale of property. The Note reflects the nature of a conventional mortgage, which is a loan of money with interest.
Yes. UIF can be a partner in real estate transactions as a method to provide faith-based financing. In general, a subsidiary of a bank may engage in any non-depository activity that is permitted to be engaged in by a national bank and its subsidiaries. Permitted activities for national banks and their subsidiaries include activities that fall within the scope of the “business of banking.” The Office of the Comptroller of the Currency (the primary federal regulator for national banks) has issued several interpretive letters indicating that faith-based real estate finance transactions are included within the scope of “the business of banking,” and are therefore permissible activities for national banks and their subsidiaries (see OCC Interpretive Letter #806 regarding lease to own transactions, and see also OCC Interpretive Letter #867 regarding Murabaha installment sale transactions). Because faith-based financing transactions are permitted activities for national banks and their subsidiaries, these activities are also permitted for UIF.
The UIF partnership program is a faith based alternative to the conventional loan program offered by traditional lenders. Under this arrangement two parties (Financing Company aka UIF and the Customer) come together to purchase an asset. In our case “the House.”
Each party contributes their monetary share towards the purchase price of the house. Customer contributes in the form of a down payment and UIF contribution is the financing amount. Since the customer uses the home for his or her benefit, a rent is paid to UIF for using their share of the property. The rent is the “profit” UIF derives for investing in this partnership. Customer acquires the property from UIF over a 10, 15, 20 or 30 year term in monthly payments.
The monthly “Buy out” payment consists of two portions: Buyout Price and Use Payment (aka Rent). Overtime… the customer buys out UIF’s share and upon final payment takes full ownership of the property.
There are two types of Musharaka Contracts. The intention of the Partnership determines which one is more favorable to use.
Shirakatul AQD: This contract is used in traditional Business Partnership(s). Profits and Losses are shared based on the investment and agreed upon partnership terms.
Shiratkatul Milk: This contract is used to acquire hard assets. It’s used mostly to finance Real Estate, machinery, equipment, etc.
UIF’s partnership program is based on the Shirakatul Milk model. This is a partnership based on an Asset Ownership i.e. Home purchase. Even though both parties (UIF & Customer) own the home together, only one party (Customer) is deriving the benefit from its use. For this reason the Customer pays a rent to UIF for utilizing the portion of the property not owned by them. Along with the rent, they also pay additional funds (Buy out $$) to buy out UIF’s share in the property. UIF’s profit is the rent received over the term of the contract. The Customer profits from home value price appreciation.
Loss Sharing: Two Scenarios:
In case of Foreclosure: If the customer stops making monthly payments and violates the terms of the contract, UIF has the right to foreclose on the property and sell it in the open market, which could result in a loss. However, before initiating any foreclosure proceedings, UIF will make every effort to work out a payment plan that is favorable to all parties involved.
In case of Natural Disaster: Where the property is a total loss and cannot be rebuilt losses will be shared based on our ownership percentage at the time of the event.
The first step towards Home ownership is for the customer to reach out to UIF and be appointed as UIF’s agent to find the property and negotiate the terms. Once the customer finds the property and signs the contract with the seller, UIF will start the financing process. At the closing table, UIF and the Customer will sign a Declining Balance Agreement and take ownership of the property. This agreement spells out the rights and responsibilities of each party and payment terms.
While the property is owned jointly by UIF and the Customer, to keeps things simple and avoid transfer taxes, UIF will waive its right to go on title. The Sharia Board has approved this arrangement so as to not create a hardship for the customer.
Property Maintenance: As per our agreement the Customer is responsible for maintaining the property. All repairs and maintenance is the customer’s responsibility. Proper maintenance of property increases property value over time and this benefits the Customer directly in the form of price appreciation.
Property Taxes: Real Estate Property Taxes benefit the Customer and their families. RE Taxes support schools, libraries, fire departments etc. Since only the customer benefits from these services they are responsible for property tax payments.
HOI: Home Insurance is required when you finance a property. If the home is damaged due to fire or other calamity, the home insurance proceeds help pay for the repairs. Just like you have to purchase auto insurance when you drive a car, you must obtain Home Insurance when you finance a house.
The difference is in the Process and the Paperwork.
The Partnership program is based on joint ownership & subsequent buy out of the Financing Company’s share over time. Conventional loan is buying and selling of money with interest added on.
Paperwork is different. Conventional loan uses a Promissory Note which is interest based. UIF Partnership program utilizes the “Declining Balance Agreement” which is based on the Musharaka model of financing.
No. Legally, a partnership can be established between any parties. These parties could be individuals, trusts, corporations, etc. In our case, UIF partners directly with the customer in our real estate transactions. There is no LLC formed.
No. According to AAOIFI standards and others, there is not a sharia requirement where partners must establish an LLC vehicle to participate in or legitimize a partnership. For years, many parties have gone into partnership on real estate or other business ventures and an LLC is not a requirement.
After seeking both legal and Sharia opinions on this matter we settled on a structure where we sign a Declining Balance Partnership Agreement with our customer and our interest in the property is evidenced by a reference to this Agreement in the publicly recorded mortgage or deed of trust. By avoiding the LLC structure the consumer is saved from the added burden of continuing expenses related to the administration of the LLC.
We offer three financing structures: lease to own, marked up installment contract, and a partnership program. You do not sign a note to borrow money. Our programs have been reviewed and approved by our board of scholars.
We are limited to real estate only and do not finance construction, development, gas stations or hotels/motels. We welcome the opportunity to finance professional offices, shopping centers, warehouses and Community Centers.
We will review your personal credit, cash flow from your business, a proven secondary source of repayment and an initial investment. Depending on the type and location of the property, the amount of your initial investment will generally be between 30% and 40% of purchase price or appraised value of the real estate, whichever is less.
Closing costs depend upon the state and the complexity of the transaction. Within the closing costs there are three kinds of fees, those charged by UIF (generally 1% of the amount financed with a $2,500 minimum), third party fees (amounts charged by other parties) and escrows (taxes and insurance).
Our faith-based Vehicle Finance Program is based on a hybrid Partnership – Installment Sale structure whereas the conventional auto loan is based on a lending and borrowing structure. Our program is very unique even when compared to other faith-based Vehicle Finance Programs as it is the only program based on a hybrid Partnership-Installment Sale structure.
The program starts out with a Partnership structure where a Joint Purchase Agreement is signed by both UIF Corporation and the applicant which gives our applicant permission to be our agent to shop for the right vehicle, negotiate the price on our behalf, and select the desired options and features of the vehicle. Once the Joint Purchase Agreement is signed and the vehicle is identified we will go through the approval process and get the financing approved. Once approved, we obtain the purchase agreement or bill of sale and draft the Installment Sale contract. This step converts the structure into an Installment Sale transaction where UIF Corporation sells the vehicle to the applicant on an installment basis. The funds are wired or mailed in a form of a check to the seller, the transaction is closed, and the customer takes title to the vehicle.
Fill out our short online form on our website www.myuif.com to apply for the program and a qualified Account Executive will contact you to walk you through the transaction. You can also reach out by phone at 1-800-916-8432 and press 3 to reach our Vehicle Finance Division. You will be sent a link to our application to complete and return with a copy of your Driver’s License and proof of income to get qualified; if employed we request one month’s paystubs, if self-employed we request the previous year’s tax return.
Once you complete the Vehicle Finance Application and provide proof of income and your Driver’s License approval can be issued within 24-48 hours. Once the approval is issued and all logistical issues are worked out between UIF Corporation, the Seller, and Buyer, you will receive closing documents for signature. Once all closing documents are finalized and proof of UIF as lien holder on the vehicle is obtained, the funds will be wired to disburse on the same day or a check is sent via overnight mail to the Seller.
This program is designed to purchase new or used personal use vehicles only (Cars & SUVs). We are not currently offering refinancing of existing vehicle obligations or financing of any Commercial Vehicles.
You can finance new or used vehicles up to $100,000 or a minimum of $5000. The terms vary between 36 months to a maximum of 60 months depending on the age of the vehicle and the strength of credit. Also, the profit rate associated with the financing will vary based on the term, down payment amount, and credit score.
UIF charges a one-time Processing Fee of $295 at the time of closing.
Recently, the program was launched in UIF’s backyard in the state of Michigan. Once the program has flourished more states will become available. Even if you are not a resident of Michigan, your inquiries are very helpful to collect the necessary data to expand our program in the states with the dire need for the program
Yes, and is strongly encouraged. We provide a Pre-Authorized Transfer Agreement for you to complete at closing which authorizes a monthly ACH payment to be withdrawn from the bank account of your choice.
The monthly payment is due beginning 30 days from the date of closing and will occur monthly on the same date. It is strongly encouraged to set up monthly recurring automatic payments via ACH by completing the Pre-Authorized Transfer Agreement at closing. The monthly payment is considered late if not received before or on the due date. If your payment is not made, the day after your payment due date a Late Payment Fee of $15 will be charged to your account. The Late Monthly Payment Fee may vary from state to state as required by applicable law. All Late Payment Fees collected by UIF Corporation are donated to charity to align with faith-based requirements.
After 30 days past due an additional Late Fee is assessed and your account is reported to the credit agencies. After 50 days past due and we are not able to make contact with you, a 4-Choice Letter is sent starting a 10 days grace period to resolve the matter. If 60 days pass with no response, we will be forced to move your transaction to Collections where the vehicle may ultimately be repossessed if the account is not made current. Following repossession, the vehicle may be redeemed prior to sale within 15 days. Each state’s requirements for late fees and redemption may vary.
Once the transaction is closed the entire amount financed plus profit is considered a debt. However, if you decide to sell the vehicle prior to the scheduled payoff we will only collect the principal amount financed plus the profit that has been earned up to that point. Any additional unearned profit based on the remaining term will be forgiven once the vehicle is paid off. You will be provided with a payment schedule at the time of closing showing you the base price payment, profit portion of the monthly payment, and the remaining Installment balance. To obtain a current payoff amount please contact our Servicing Department by calling 734-741-5858 and requesting your current vehicle financing payoff amount.