New Program Through Verity Credit Union Offers Inclusive Solution for Affordable Housing
Posted by Jennifer Johnson on September 11, 2023
Observant Muslims seeking a place to live amid Seattle’s historic housing crisis face the additional complexity of Islamic law forbidding traditional mortgages.
Verity Credit Union is creating a solution that addresses both issues — a Shariah loan program that offers affordable housing within a new community and cultural space in the southeast part of the city.
Named Othello Square, the four-building development will include a multicultural center, healthcare access, 230 affordable housing units, and other features that provide access to education, career growth, and support for entrepreneurship or maintaining a business. Verity’s loan program, currently in the pilot stage, will finance 68 units in U-lex, a residential housing cooperative for families earning 80% Area Median Income or less at the time of purchase.
Now Muslim community members who have been typically left out of the home-buying process or had to compromise their beliefs have a path forward, said Chief Lending Officer Tina Narron.
“As a credit union, our role is to listen to our communities and find the gaps where we can provide services that aren’t being met in our communities,” she said. “This is one of them.”
Processed and serviced within Verity’s consumer lending division, the product — along with a traditional coop loan the credit union developed for HomeSight, a housing and development center overseeing the cooperative — helps ease a housing shortage in Seattle that’s only grown worse. Without a dramatic increase in new housing over the next two decades, the city will simply run out, according to Verity.
New to Shariah lending, the credit union developed the loan structure in close partnership with its network in Malaysia through the Global Alliance for Banking on Values, regulators, several consultants, and approval from mosque leaders at Abu Bakr Islamic Center in Tukwila to ensure it aligned with Islamic teaching.
The process differs considerably between the two cultures. Interest-based loans in the religion are not allowed, so once the buyer is prequalified, Verity buys the unit from the coop and then sells the unit to the buyer at a higher cost, constituting the fee income the credit union earns to finance the loan.
“We’ve had to become creative in how we offer the loans,” said Narron. “It’s a new process and a new way of thinking about things.”
The product will launch before the housing cooperative opens in 2025. But the process goes beyond the loan’s completion — Verity is developing cultural diversity training for employees and considering a future strategy involving more products and services aligned with Shariah as well.
“This little pilot program has the potential to grow into a more purposeful and inclusive set of services for the Islamic community,” Narron said.