The Agudath Israel of America organization issued a Jewish legal ruling prohibiting Jews from taking out loans from majority-Jewish-owned American mortgage lender Quicken Loans, due to the fact that Jews are forbidden to charge interest from each other.
Torah law forbids Jews from charging interest on loans, including mortgages, given to fellow Jews, and also forbids Jews from taking out loans in which they will be charged interest by another Jew.
“Prominent leading halachic authorities have issued a [ruling] that any Jew who obtains a loan with interest from Quicken Loans or any of its subsidiaries is in danger of transgressing the prohibition of Ribbis D’Oraisa,” said the Agudath Israel ruling, referring to the bible commandment against charging interest.
The most common solution to the problem of interest is a contract called a heter iska, an agreement lender and borrower sign that makes them co-investors or business partners in which one party provides capital and the other invests it. This work-around enables the parties to engage in the same interest stipulations in a way permissible under religious law.
On Monday, Dan Gilbert, chairman of Quicken’s parent company, Rock Holdings, responded that Quicken would assemble a team “to quickly and efficiently dive into the issue of ‘heter iska,’ and once and for all attempt to find a solution that the observant Jewish community, as well as our legal and capital markets team, finds acceptable.”
Those who already have loans with Quicken will have to start the loan process again, according to Agudath Israel spokesman Rabbi Avi Shafran in an interview with JTA. “Existing loans should be dissolvable and re-created within a heter iska framework to permit them,” he said.
Other options include working with banks owned by non-Jews, as well as smaller banks that have heter iska in place.
The majority of Israeli banks already utilize heter iska in their lending system.