LARIBA to have acquired a national bank—the Bank of Whittier, NA—
which accumulated the deposits needed for financing.
Another important aspect of dealing with Freddie and Fannie has been
the documentation used in the RF financing process. Such documents must
follow the same standards called for by the industry and regulations. Our
LARIBA Shari’aa-based RF finance model paid us a wonderful dividend,
because we did not have to receive a special exception from the GSEs or
regulators to be approved. The risk of receiving an approval with an excep-
tion is that this exception can be taken away when times are not suitable.
While others went through expensive legal maneuvers to make the docu-
ments look ‘‘Islamic,’’ then diluted the Islamic content to bring it back to
the standard codes, we at LARIBA started on the right and straightforward
track. It is important to note here that the LARIBA Agreement described
earlier is a required part of the documentation called for by the GSEs.
Many of the ‘‘Islamic’’ MBS companies, which are based on Shari’aa-com-
pliant models, were designed for sale to the ‘‘Islamic’’ banks in the Gulf and
Malaysia. In contrast, the LARIBA RF MBSs were designed to be offered
for investors and all entities in all markets, and are of the highest quality.
These MBSs are ‘‘manufactured’’ by us at LARIBA. That is why they are
not a mere ‘‘black box,’’ like other MBSs, because we simply know the com-
ponents of each of the LARIBA RF MBSs.
Other sources of capital are the share capital of the company and in-
vestments from accredited and qualified high net worth and sophisticated
investors. It is important to note here that not a single investor or share-
holder has lost a penny since we started our operations at LARIBA in 1987.
In addition, we consistently distributed dividends and profits that were at
least one to two percent higher than what any riba-based institution would
offer on a time certificate of deposit.
Advantages of the LARIBA RF Shari’aa-Based Model and Procedures
1.Applies the fundamentals of the RF Law (Shari’aa) of the Judeo-Chris-
tian-Islamic system. It does not use ruses (heelah) nor financial engi-
neering and structuring techniques that are usually used in the Shari’aa-
compliant models.
2.The LARIBA Agreement clearly spells out the bases from Shari’aa upon
which the relationship, the process of financing, and the process of cal-
culating the monthly payments are built.
3.It is universal and designed to benefit all people of all faith.
4.It is not based on renting money at a price called interest rate. It is based
on the actual market-measured rent of the items to be acquired as meas-
ured—live—in the marketplace by the customer and the finance274 THE ART OF ISLAMIC BANKING AND FINANCE