Ijara CDC - Conversion Loans Halal?

Salam my brothers and sisters,

My name is Ishaq out of NJ, USA and I’ve been involved in the investment/distressed real estate space for quite some years now. Through my journey in this industry, I’ve remained true to faith Alhumdullilah and avoided the use of interest/riba based loans and referring others to same. Up until recently, there hasn’t existed any real sharia compliant product in the investment space here in the US that would finance distressed properties. We have Guidance Residential and UIF but they’re both conventional financing companies and will not finance properties in need of rehab/repairs.

However, recently, someone brought to my attention that a company known as IJARA CDC, which apparently is run by a group of individuals who originally geared into place Islamic finance in the US, have released a “Conversion Product” in which they basically convert an interest bearing loan into that of an Islamic compliant one, but only post closing.

The idea is that you’d sign into an interest bearing loan and close on your property with that loan but have the niyah/intention of the Islamic loan and quickly post closing, back to back, implement their Ijara structure and convert the loan into a halal one,

Their websites are:

From my understanding, the parent lender where the funds come from is Voro Capital

After you sign and close with Voro and their interest rate it, Ijara CDC converts it and you pay a profit rate.

Im not sure of the permissibility of this hence why I’m here on these forums.

If this is indeed permissible, it would be huge in catapulting my investment business to new heights by helping me leverage my capital and take on more distressed projects and bring them up to par and ultimately improve housing in more neighborhoods,

Would love to hear the thoughts of the knowledgable.

@Mufti_Faraz_Adam @Mufti_Billal

Barakallahu Feekum,

Wa alaykum salaam,

They seem to have a Shariah board in place? Can you contact their Shariah board for confirmation and information on the product? You may share here for everyone’s benefit.

Allah knows best

Yes, I’ll reach out to them and see what I can get and post back here for everyone’s benefit InSha’Allah.

Brother, do you have any update on this. Jazakallah

Assalamo alaykom,

I am also in a similar situation. I contacted Ijara about the fatwa. I am attaching it with this post. They also refer to it in their website. I never heard of this concept of the conversion process. Can someone with experience and knowledge in this matter comment? Thank you.

Assalaamu alaykum,

This Sharia certification is over 10 years old. Without the latest annual Sharia audit, we cannot guarantee any Sharia compliance.

Every Sharia certification must be followed up with a Sharia audit.

A Sharia audit is what actually tests Sharia compliance.

We would request you to ask for the latest Sharia audit report.