Official recording interest-based loans : notarizing interest loan

Fatawa Question

Dear brothers in Islam. My question is a difficult one for me, because I didn’t know how to answer it. This is the scenery : a goes to B (a bank) and requests a loan with interests. B gives the money to A, but the bank wants a guarantee : a must mortgage his house in guarantee. So, A and B sign the loan contract, so that means that it exists ; but in the case of the mortgage, for its constitution and existence, the administration must write a document to constitute the mortgage that guarantees the fulfillment of the obligation of A, that means A has to pay the loan with the interest or the bank will get the property of his house. My question is : knowing that the loan contract already exists before the mortgage constitution, is the administration considered one of those who fall in Riba, although it only signs for the existence of the mortgage (just a guarantee) and not for the loan based on interests, because it is previous ? So, is this indirect collaboration of the administration considered equal as the determination of the X per cent of the interest tax, or considered to be one of the witness of Riba, even though the contract already exists and its action is independent of the contract ? Jazaku Allahu Khairan.

Fatwa

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Publication Date

2008-07-24

Main Subjects

Economics & Business Administration
Islamic Studies

Topics

• Banks
• Islamic jurisprudence
• Contracts
• Loans
• Ownership
• Witnesses
• Hedge(Finance)
• Usury
• Subprime mortgage

No. of Pages

2

Data Type

Fatawa

Language

English

Record ID

BIM-730482

• APA
• MLA
• AMA