The New York branch of the United Bank of Kuwait has been given permission to offer a unique type of financing to help Muslims in the United States buy homes without violating the Islamic ban on paying interest.
The Office of the Comptroller of the Currency has allowed the bank to offer so-called "residential net leases," under which the bank will hold title to the property while charging a monthly lease equivalent to the principal and interest payment that would be required in a conventional mortgage.
When the lease expires after a specified number of years, the customer will become the legal owner of the property.
The OCC's opinion was written in October, but released this week with several other interpretive letters. The United Bank of Kuwait is the first U.S. depository institution approved for this type of home financing, which is common in Islamic countries.