Sophie Mutamuliza said buying a house has been a top priority for her and her husband since they got married in their home country of Rwanda fourteen years ago.
"It’s been our dream," she said. "It’s been our dream since back home."
Mutamuliza said the dream was put on pause when they moved to Portland in 2013, as they focused on building a new life here.
Now Mutamuliza works for MaineHealth, her husband is a social worker, they have four children and the family decided it was time to buy a home.
But as observant Muslims, they abide by a religious prohibition against paying interest, which is viewed as financial exploitation. That meant conventional mortgages were off the table. And while Islamic-compliant financial institutions are common in other parts of the country, the couple couldn’t find any Maine-based banks that could meet their needs.
They were not the first Muslim family in Maine to run into this barrier.
"So the problem has always been there. But it just really got more serious as the size of these communities grew," said Reza Jalali, executive director of the Greater Portland Immigrant Welcome Center. Jalali estimates that there are somewhere between 15,000 and 20,000 Muslims in Maine.
To make large purchases without violating their faith, Jalali said some community members would pull together informal loans from family and friends.
"But as you can imagine that that causes its own hardship. Because for one person to be able to become a homeowner and then repay back their relatives, it might delay the relative's opportunity [...] to buy a home," he said.
Several years ago, Jalali said his organization began working with Androscoggin Bank to try to come up with a solution.
Neil Kiely, CEO of Androscoggin Bank, said through those conversations, it became clear that the lack of Islamic-compliant financing was keeping some Muslim families stuck in rental units.
"So they don't get the economic empowerment that comes from building equity in their own home, which can have a generational impact," Kiely said. "And they're also denied the personal fulfillment we have about having your own home and the pride of ownership and raising your family there."
Kiely said it took the bank about 18 months of research and community outreach to develop a mortgage product that satisfied religious guidelines, regulatory standards, and the bank’s own financial interests.
Kiely won't share the exact formula the bank came up with, but he said in the end the numbers all work out.
"The economic costs and benefits to the bank and to the homeowner, are essentially the same as a conventional mortgage," Kiely said.
And While Androscoggin Bank may be breaking new ground in Maine, Islamic-compliant financing has been steadily gaining traction in states with larger Muslim populations.
"We've seen, we've seen a steady growth ever since we launched in April, 2002," said Hussam Qutub, senior vice president at Guidance Residential, a Virginia-based company offering Islamic-compliant mortgages in 34 states.
Qutub said the difference between his company’s product and a conventional mortgage is in the structure. The financing company and the client co-purchase the home, with the company putting up most of the money.
Then, over time, the client pays back the financier's share, plus an added fee to compensate the institution for living in the house.
"So we're really charging on the customer's usage of our portion of the property and that declines each month as they're acquiring more, we own less," he said.
Qutub said those payments on top of the principal, though not technically interest payments, do qualify for the IRS’ mortgage interest tax deduction. Kiely said Androscoggin Bank's new product also qualifies for that deduction.
Meanwhile, Sophie Mutamuliza and her family used Androscoggin Bank's new mortgage product to buy a home in a quiet, wooded neighborhood in New Gloucester. Nearly a decade after she arrived in Maine, Mutamuliza said she feels as though the family truly belongs here.
"Now we felt, now we are here, no moving back," she said. "We belong to Maine. And that's what we're looking for."
Androscoggin Bank said it has already closed on multiple Sharia-compliant contracts this year, and has about a dozen more clients whose homes are under contract or who are pre-approved.
Correction: A previous version of this story mischaracterized Guidance Residential as a "lender". To meet Islamic finance guidelines, the company does not lend money, but rather co-purchases homes with buyers.
