1.The RF model is based on a belief that can be articulated as ‘‘We do not
rent money; we invest in you.’’ Applying this model requires that the RF
banker approach each transaction as an investment (using The Declin-
ing Joint Venture Lease-to-Own Model) instead of lending. The RF
banker advises the customer, to the best of his/her abilities, as to
whether the transaction is a good investment or it is better for the cus-
tomer to rent. This process prevents the buyer and the finance company/
bank from participating in an economic bubble and from buying an
overpriced facility or business.
2.The RF model requires that the RF banker does not calculate the
monthly payment by starting from an interest rate, as is done in riba-
based finance. Homes, cars, and businesses can be rented at a fair mar-
ket value that is defined and agreed upon by the RF banker and the cus-
tomer after studying the market. The monthly payment is based on the
market rental value of the property to be financed. The rental value is
determined by going to the market—both the customer and the RF
bank finance officer independently—to measure the rental rate of a simi-
lar property in the same neighborhood by asking real estate agents in the
area. The fair rental value is determined by mutual agreement between
the customer and the RF finance entity. In this process ofmarking to the
market, the house buyer calls three different real estate agents to get the
actual market value of the rent of a similar house, if it were to be used as
an investment property. In addition, the RF bank finance officer does the
same. This way, the RF bank obtains a marked-to-the-market, agreed-
upon property market rent that the RF bank finance officer subsequently
uses in its calculation of the rate of return on investment to decide
whether buying the property makes prudent economic sense. Prudence
in investing is an important ingredient of the spirit of RF financing.
3.The RF model requires that the RF bank or finance company work with
clients in a humane, merciful, and fair way (tarahum) in times of trou-
ble. To do this, the RF bank helps families that are in trouble by coun-
seling them and offering them the facility of an RFqard hassan, a ‘‘good
loan,’’ without any increase or interest, from a nonprofit organization
that can assist in making part or the whole of the monthly payment un-
til the difficulty is eased—for example, when the husband gets a new job
to enable him to resume the payments.The Stages Used to Implement the Shari’aa-Based
LARIBA Model of Financing
The LARIBA Shari’aa-based RF finance model is based on the original and
pioneering fatwa and model developed for financing homes in the United
RF Banking Model for the 21st Century 259