Orthodox Jews who had taken out mortgages with Quicken Loans, which claims to be America’s largest mortgage lender, were dismayed to learn that their arrangements with the Detroit-based company were in breach of Jewish law.
Agudath Israel of America, a major haredi Orthodox organisation, issued a legal ruling in April prohibiting Jews from taking out loans from Quicken – because it is majority-owned by Jews.
Jewish law, known as halacha, forbids Jews from charging interest to other Jews. So Jews are allowed to own mortgage agencies – and lend to non-Jewish customers – but they are not allowed to sell fellow Jews a 30-year fixed rate (or anything else).
Likewise, if you’re a new Jewish homeowner, halacha says you are not allowed to take out a mortgage with a Jewish-owned company. The same also goes for other kinds of loans.
Said the Agudath Israel:
Prominent leading halachic authorities have issued a [ruling] that any Jew who obtains a loan with interest from QL or any of its subsidiaries is in danger of transgressing the prohibition of Ribbis D’oraisa (the biblical commandment against interest).
But, as with so many other religious laws, there are loopholes, and yesterday it was reported that Orthodox Jews can continue to take out mortgages and other loans from Quicken Loans after the company adopted what is known as a heter iska, a technicality that changes the loan into a co-investment in which the lender and borrower become “business partners” – one supplies the capital and the other uses it as they see fit.
Agudath issued a statement notifying the community that Quicken Loans had adopted a global heter iska covering all mortgages initiated after June 8. It said:
On behalf of Torah Jewry across America, we thank Quicken Loans for its sensitivity and devotion to the needs of the community. The company has exhibited true leadership in taking this bold move quickly and efficiently, trailblazing a clear path forward for the observant Jewish community. We are grateful for this and we express our deepest appreciation.
The heter iska does not retroactively reclassify existing loans, however, according to Agudath spokesman Rabbi Avi Shafran.
This means that if you’re an Orthodox Jew with a pre-June 8 Quicken Loans mortgage, well, too bad. You’ll need to dissolve it and start over.