CONVENTIONAL AND ISLAMIC MORTGAGE FINANCING: A LEGAL COMPARISON

• BACKGROUND OF THE STUDY

The quest to research into this topic was appropriate by my interest to look into the Islamic Financial System. I have being opportune to have a critical

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experience of how Nigerians and most importantly muslims live in their various habitat and likewise attended some few seminars and talk shows even though they are not reported and have concluded to help the Ummah in my little way. However, in proffering a solution to the low standard of living among the Muslims I have also decided to look into the legal means of getting a meaningful life at the same time a life that is not against the doctrines of Islam. Islamic Financing System which I know has helped a lot of Muslims outside Nigeria should also be introduced to bring an end to the low standard of living of most Muslims in this part of the world.

Subject to my interest in eradicating the problems of home ownership among the muslims this work was researched into so as to bring to the notice of those in need of home where and how they can go about the funding of their homes and the measures put down by the government to assist home ownership and to realize the dream of everybody to become an owner

• OBJECTIVE OF THE STUDY

The major purpose of this research work is to do a legal comparism of Islamic and conventional mortgage financing and ways by which the lives of Muslims can be upgraded and how they can be landlords without transgressing the

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bounds of Allah. Also, this work intends to bring to the knowledge of muslims the varieties of private and public institutions [Islamic or contemporary] which can profer solutions to the problems facing the Ummah, that is, difficulties in accessing accommodation by the Muslims in Nigeria, which is evident in the light of their conditions of living.

• FOCUS OF THE STUDY

The focus of this research work is to deal with the problems accruing among Muslims and the legality of the likely solutions resorted to. It is evident all over the country there is a problem of accommodation and it is in fact more rampant among the Muslims this is basically because of the process through which housing loans are gotten, i.e. the calculation of interest. Also to differentiate Islamic Mortgage financing and Conventional Mortgage financing. It is also to reposition the market for the Muslim individuals and Islamic Institutional Enterprises that have the potentials of assisting in achieving the goal of providing homes for the Muslims at affordable prices and/or convenient repayment plans. It is also to add a little new idea to the topic of Islamic Mortgage Financing knowing full well that it is relatively a new area of research. And in similar vein, it is to highlight some of the

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challenges of satisfying both religious tenets and governmental rules and regulations.

• SCOPE OF THE STUDY

This work measures to seeing Muslims live a decent and stress free life with the concept of Home financing within Nigeria and also the entirety of the world because we are each other‟s keeper and usually at rest when our Muslim brothers and sisters are. The major issue is the possibility of a decent practice of a decent Islamic Mortgage Financing System in Nigeria and touching the lives of the target people.

The conceptual frameworks of the systems of Mortgage Financial Systems will be examined in this work; this is aimed at so as to examine the modes of operation of the systems. The legal frameworks of the system will be examined to know the extent to which the operation of home financing has been recognized.

• METHODOLOGY

In carrying out the research, information will be gather from both published and unpublished materials, journals, textbooks, articles, fieldworks and most

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importantly the Holy Quran and Hadith. The project by its nature demands a very carefully handled research. This being that many people are just being introduced to this kind of Islamic Financial Institution. People‟s attention had earlier been averted to conventional banking system .That is why some a muslims have found it difficult to hold but to concur with some hired writers by the west that there is no difference between conventional banking system and Islamic banking system. There for the above listed methodologist have being employed and exploited in a bid to present or hit the target of the work.

• LITERATURE REVIEW

The work of Dr. Abikan A.I. was examined titled Constitutionality Of Islamic Banking published in Contemporary Issues in Islamic Jurisprudence, a book published in honor of Chief Justice Of Nigeria Honorable Justice Idris Legbo Kutigi3, this work was fully relied on for the legality of Islamic Mortgage Financing but the concept of Conventional and Islamic Mortgage Financing Systems were not discussed. This work discussed in details the history of Islamic Banking in Nigeria and the laws in place for the establishment of Islamic Banks.

3 Rawel Fortune Resources, Benin. 2009 chapter 7, pages 94-12

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The work of Taiqullah Khan titled An Introduction to Islamic Finance is one of the relevant materials used in this research. He limited his discussion to the concept of Islamic Finance. He however did not discuss about the legality of Islamic Mortgage Financing which I intend to concentrate in this research work.

I have also relied on the article titled Theory and Practice of Modern Islamic Finance from Dr S.M. Solaiman. The author centered his discussion on the practice of Islamic finance system in Australia without making comparisms between Islamic Mortgage Finance System and Conventional Financing. The two systems will however be compared in this research work. Another material relied upon in the course of this research is that of Sheik Haithman Al-Haddad who in his work titled Islamic Mortgage: Paradigm Shift or Trojan horse? discussed extensively on the doctrines of Islamic Mortgage Financing and the fact that it has been introduced even in places where the practices of Islam has not been accepted and the fact that Islamic Principles and teachings of Islam should not be twisted to fit preconceived solutions. He however made his discussions not to go beyond the peripheral level and he has made we muslims to realize our roles that is protecting the doctrines of Islam from external alterations.

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• DEFINITION OF TERMS

1. Mortgage: A mortgage is defined in another way as a mortgage that is not backed by government insurance, by which the borrower transfers a lien /title to the lending bank or other financial institution. These mortgages, which feature a fixed periodic payment of principal and interest throughout the mortgage term, are typically used for Home Financing.4

1. Financing: the money necessary to do something, especially to fund a project.5

• Legality: the state of being in accordance with the law.6

1. Issue: The prospects envisioned from the doing of an act.

• Black's Law Dic, (8th.ed Thomas West B.A.Garner ed.2004.)

• Microsoft Encarta 2009. (1993-2008 Microsoft Corporation.)

• ibid

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• CONCLUSION

The above is an elucidation into the thematic background of this research study. The Abstract succinctly explains what the main gist of the research study is all about while the researcher‟s interest about the line of research was briefly mentioned in the background. The primary goal that constitutes the base of this study is examined and after this objective, the direction in which the research work will follow is revisited. This is followed by the intended area of concentration of the study while the methodology to be employed in the search for facts and figures to give credit of validity to the research work is also revealed. In furtherance of broadening the understanding of the end-consumers, a quick review of the previous works in the same direction is done. This is ended by the definition of salient terminologies for correct and accurate comprehension of what the researcher intends by some of these key words.

From the foregoing, it suffices to say that a clear cut path to be followed in the conduct of this research work has been laid