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Our home financing model is based on the concept of “Declining Participation in Usufruct” (DPU) (Declining Musharaka in rent). This is done as the basis for calculating the monthly payment and marking the value of the property to the market using actual market rental values of similar properties in the same neighborhood. The uniqueness this model, which Bank of Whittier calls the LARIBA model, is that we DO NOT RENT MONEY. Instead, we approach each transaction as an investment. The market rental value of the property financed determines attractiveness as an investment. If the house is overpriced, the model will flag this fact to the homebuyer in order to go back to renegotiate a lower price or to wait until an existing market “bubble” is burst.

It is important to note that each property like a car, a home, a commercial building has two rights of ownership. The first is the ownership of title to the property called “Milkul Raqabah” (the ownership of the neck). The other right is the right to use the property (Haqul Manfa’aa – the usufruct). For example one can own a car or a house but he or she can rent out the right to use the car or the house by leasing it.


  1.  Bank of Whittier conceptually purchases the property jointly with the client.  Bank of Whittier would authorize the client to act as its agent (wakeel) to select, negotiate the price of, and purchase the Property.

  2.  Bank of Whittier authorizes the client to undertake the purchase of the property from the vendor and record the title (register it) directly into his or her name. Client becomes the owner of title to the house or owner of Milkul Raqabah.  Bank of Whittier retains its share of the usufruct - Haqul Manfa’aa.

  3. Out of their own free will, the client offers to buy and  Bank of Whittier accepts to sell its share/units immediately at the same price. The value of the sale is paid in monthly installments over a period of time up to 30 years without adding any interest. The monthly payment is called REPAYMENT OF CAPITAL (“RofC” – pronounced rofsee).

  4.  Bank of Whittier and Client agree to perfect a lien [1] (implied co-ownership) on the property in favor of  Bank of Whittier.  Bank of Whittier agrees with the client to share in the income realized from the use of the house based on the actual rental value as measured in the market. With this lien, the client and  Bank of Whittier share the income from the lease of the property proportionately between them. This income is called Return on Capital “RonC” -pronounced “ronsee”. As the client pays back his or her “Riba Free Loan - dayn”, this progressively reduces  Bank of Whittier’s share in the usufruct (Haqul Manfa’aa) as well as increases the client’s share gradually to reach 100% at the end of the Financing Period.

  5. In order to make sure that money is not rented at the interest rate of the day which is RIBA, we research the actual market fair rental value of the property in its geographic location. The client and  Bank of Whittier officer – each – research the market to find how much a similar property leases for in the same market of the property to be financed and present three documented estimates each (a total of six estimates). Sources of rental value estimates include leasing agents, real estate brokers, News paper advertisements and online resources. The goal is to obtain the rental value, per square foot based on similar properties. The client and  Bank of Whittier compare their findings and agree on a rental value to be used in our proprietary model.

  6. The monthly payment paid by the client over the financing period of up to 30 years consists of a portion of the unpaid Riba Free loan (dayn) - RofC and an amount equal to  Bank of Whittier’s proportional share of the agreed upon rental value – RonC. Our proprietary model does the arithmetic using the proprietary Riba Free algorithm.

  7. The LARIBA Computer Model inputs are: the property value, amount to be financed, the number of years to pay back and the monthly rental value obtained from the market. The unknown here is the Rate of Return on Investment – ROI. This contrasts with riba-based banks where they use an interest (riba)-based amortization computer program. They input: the amount to be financed, the number of years to pay back and the rent of money (interest) and the unknown is the monthly payment.

  8. The LARIBA Model analyzes the rate of Return on Investment in the property. There are three possible outcomes from this analysis of the level of the ROI. These are:
    • If the ROI is higher than the return expected by our investors.  Bank of Whittier decides to finance and reduces the rent in order to make the monthly payment compete with Riba-based banks.
    • If the ROI is much lower than what our investors are expecting (say 2% while the competing investments yield 6%), LARIBA declines the investment and the financing is denied. This has been the main reason for  Bank of Whittier to raise the red flag for many of our customers in Arizona, Florida, Massachusetts, Nevada, Washington DC and parts of California. We have saved many of our applicants from participating in the 2008 real estate bubble.
    • If the ROI is marginally lower than the expected return by our investors (say 5% and our investors expect 6%),  Bank of Whittier advises the client to renegotiate the price lower. We have done that a few times.

  9. Upon full Repayment of Capital,  Bank of Whittier will release its lien back to the Client thus signaling the end of the transaction.

  10. In order to protect our clients in case of adverse situations against the possibility of excessive legal fees, unusual language in the contracts that make them irregular and difficult to pursue legally, and the putting of name of company on title with client,  Bank of Whittier uses standard industry and regulatory sanctioned contracts and uses a rider called the LARIBA Agreement which describes the process followed above and the rental value used as the basis for the payment calculations.




[1] Please note that some mis-translate the word lien as Rahn (in Arabic it literally means pawn). In a Rahn situation the ownership and the right of use of the property is arrested completely like in case of pawning a watch for money. In a lien, the right of use is not arrested and the ability to share the right of use is also allowed.

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