What an apt origin for the term 'mortgage'

[Heba E. Husseyn]

Everyone is apprehensive of undertaking a mortgage.  It involves instalment payments made to financial institutions.  Whether these instalments of money are for the purchase of homes, cars, furniture or just ordinary loans .... the interests charged by banks, credit unions and payday loan centers from middle-class and lower income individuals are exhorbitant.  The payday loan centers in Canada that usually deal with lower income clients, were lately ripping off these poor people by charging such incredibly high interests that the federal govt had to intervene to crack down on their oppressive policies.  Not just that, but all financial institutions plan the mortgages very cleverly, making sure that the payments continue for the longest period of time so that they can go on doubling and quadrupling the amount.  In the process, many people get crushed under the pressure of bad debts.  Many end up ruining their lives with anxiety.  Plenty of them become financially broke.  Thus, the Noble Quraan forbids money- lenders to charge interest.  The system is far too oppressive and wrecks the lives of common people.  This problem is particularly rampant in the West.

Now, here's the interesting part of it.  With all this talk on the collapse of the housing market going on in the U.S., there was a news report on television recently.  They said that the term 'mortgage' was derived from a Latin word.  "Mort' means death and 'gage' means pledge.  Therefor, 'mortgage' means to 'pledge death.'  Apparently, whoever introduced this system of receiving payment in instalments with interest (mortgage), was well aware of the fact that it's a brutal idea.

[Zainab_M]

Now, here's the interesting part of it.  With all this talk on the collapse of the housing market going on in the U.S., there was a news report on television recently.  They said that the term 'mortgage' was derived from a Latin word.  "Mort' means death and 'gage' means pledge.  Therefor, 'mortgage' means to 'pledge death.'  Apparently, whoever introduced this system of receiving payment in instalments with interest (mortgage), was well aware of the fact that it's a brutal idea.

Absolutely.  This mortgage system is a killer, to put it candidly.  And all financial institutions who are into it are financial assasins of the middle and lower classes in particular. 

Your description of how it works in the first paragraph was very well put.

Thanks sis .. and Wa'salaam

[Ruhi_Rose]

A fantastic piece, I really like it.  The origin of the word 'mortgage' is eerily true. 

One question, though it's not directly connected with this topic probably.  We know that the Noble Quraan forbids interest.  Does this also apply if put the other way round, that is, yields given to individuals by the big banks on personal investments of these individuals?

[Zainab_M]

One question, though it's not directly connected with this topic probably.  We know that the Noble Quraan forbids interest.  Does this also apply if put the other way round, that is, yields given to individuals by the big banks on personal investments of these individuals?

Good question sister.  I've reflected this issue carefully several times in my life, keeping in mind the words of the Glorious Quraan on forbidding interest (or riba) and the social setup of that time. 

According to my perception, the kind of interest that's forbidden in the Quraan is the one that ensues from a 'person to person' dealing, or the interest acquired from an individual by a group / organization.  It's important to keep in mind the reason as to why the Quraan forbids riba.  The Quraan never passes a commandment without a reason.  Therefore, the reason why riba is forbidden is because, as sister Cat already explained very well in her brief article,  it wrecks peoples' lives .. plunging them into debt, anxiety and misery.  It's the kind of misery that rises subsequently because with each delay of payment the amount of debt rises.  Most importantly, it is always at an individual level that people suffer and find it hard to pay the exhorbitant interests.  Oraganizations that pay interest don't suffer, and I'll get into that in a minute.  During the days when the Quraan was revealed, there were no banks or credit unions etc.  There were also no such financial products as different investments.  If people wanted to save money for a particular purpose, they would simply save it and keep it in their homes.  Similarly, if they wanted to borrow money, they would either borrow it from a friend, a relative or a professional money lender.  These were all individuals, not organizations and their clients were also the same.  Thus, lending and borrowing was on a 'one-on-one' level.  When the money lender would charge interest with the principle, the poor borrower would be pressured.  At present, the money lenders are all organizations.  But the borrowers are still the common individuals who get terribly pressured with interests, just like the ones before.  Except in cases where one bank may borrow from another bank - here the transaction is between two organizations which is a very different scenario from individual involvement.

Coming to your question, if an individual invests some money in a bank or holds an interest based account in the bank, this means that that individual is being given a certain percentage as interest by the bank.  So, this again becomes a different scenario because it's the organization that giving interest to the individual.  Organizations are huge institutions.  Their every dealing and transaction is carefully planned to safeguard their well-being and to protect them against loss.  If they give 2% interest to a client or an account holder, they'll make sure that by giving 2% to an individual client, they benefit at least twice that amount from that transaction.  Besides, banks are multi-billion dollar financial institutions.  It's impossible for them to get pressured by individuals.  It's always the other way round as we've seen. 

Therefore, an individual being given interest from a bank is a very different practice compared to an individual acquiring interest from another individual or a rich organization taking interest from a common individual.   This is the way I see it, and I've come across many Muslims who also agree.  The kind of interest or riba prohibited in the Noble Quraan is the transaction between a professional money lender and a single common individual.  To my understanding, the Quraan does not present (nor does it disallow) the concept of a big and rich organization giving an yield to an individual as a thankful gesture for opening an account or investing some money in that organization.  With this, neither the individual nor the organization suffer and no one is pressured.

And only Allah knows best. 

[Zainab_M]

Btw .. this original article by sister Cat is an useful and serious piece.  So I'll transfer it to the Writing Room.  I suppose it'll be better suited there. 

[Ruhi_Rose]

Good question sister.  I've reflected this issue carefully several times in my life, keeping in mind the words of the Glorious Quraan on forbidding interest (or riba) and the social setup of that time.  .............

hmmmm, I read you every bit.  I too have much the same perception.  I asked because whenever I say what you've mentioned to many in our Muslim community, they hardly listen before starting to yell.  I like how you've analysed the issue.  The Quran is a practical Book and issues instructions for the society based on concrete reasons.  Your analysis brings out some very valid points.  There's a difference between giving interest (or money) to an individual and taking from him or her.  Also there's a difference between taking from an individual and taking from a multi-billion dollar company according to its product instructions.   

Thanks so much sis.  Many salaams and peace!

[Zainab_M]

I would also like to add that when financial organizations take interest from individuals - mortgage payments with interest, loans with interest and interest on credit cards - come in the Haram category, because in such cases it's the individual that pays interest to the rich organization from his or her hard-earned money and in the process deprive their own families of a better life because of the greed of the multi-billion dollar financial market. 

[N. Truth Seeker]

Good question sister.  I've reflected this issue carefully several times in my life, keeping in mind the words of the Glorious Quraan on forbidding interest (or riba) and the social setup of that time. 

I follow and appreciate your perspective sister.  Banks in all Muslims countries, including Saudi Arabia, are interest-based.  The purpose of prohibiting riba in the Noble Quran is because riba causes anxiety and the strains of pressure ruin the personal lives of families.  So, it's ok for rich organizations to give them a yield, but these rich orgnaizations shouldn't be taking from them.  I also realise that if these organizations don't take riba from clients, they won't be that rich anymore, and might not be in a position to give any yields or interests to clients either.  This would be a good way to begin finishing the culture of riba altogether.  However, govt run banks can give yields to the unemployed and elderly on their a/cs or investments as a financial help.

Sister rose -  The hadith has written some very strange narrations on riba which most people accept instead of rationally trying to analyse the Quranic dictate as sister Zeynab just did.  Thus the people think they're entitled to "yell" the moment this topic comes under discussion .... so don't be surprised if u r not given a chance to speak    

[N. Truth Seeker]

btw - that Latin break-up of the word mortgage is right on.  I don't know how they showed that bit on tv ... it's like exposing a profound social vice.

[Heba E. Husseyn]

I also realise that if these organizations don't take riba from clients, they won't be that rich anymore, and might not be in a position to give any yields or interests to clients either.  This would be a good way to begin finishing the culture of riba altogether.   [/font]

Yeah, sure this would be a good way to finish the system of riba.  But you know, though the banks wouldn't be as rich if they didn't take riba from people, yet they would have enough money to pay yields to deserving people and even save for themselves.  Let's look at it this way;  people keep purchasing property (houses, apartments or condos).  The transaction has to be done thru the bank otherwise there's a big chance that the buyer might cheat the seller or vice-versa.  So .... when the bank comes into the picture, it needn't charge morgage with those exhorbitant percentage of interests, but it can keep a monthly fee for its services - anything between $50 to $100 a month.  The clients would quite easily be able to afford this as it would be much less than the interest they're now paying to the banks.  At the same time, considering that the banks would be receiving such a fee from all property buyers, they'd be making pots of money.  I realise it would be no way near what they're makin now with riba, yet a simple service fee would not just allow them to survive but to survive well and take care of others too.  Last but not least, it would be quite Halal as well.  After all, banks in many third world countries don't earn a nickel thru mortgage because in many third world countries they don't have the mortgage system at all as most people buy properties with complete downpayment.  Yet these banks are doing pretty well.  If there's a will, there's a way.  But unfortunately the Western financial market still has that 'Shylock the Jew' mentality, taking them back to the 1st century.  Not to mention the total breakdown of the US housing market is entirely due to the riba system.  The greed for riba was so great among the banks that although they knew most of those people who applied for mortgage were barely in a position to undertake one, yet they were given a mortgage because the banks wanted to rip them off.  And now those same banks are themselves stuck in a credit crunch.  Serves them right.   I'm only sad because the repercussions of the US recession are being felt on export / import businesses around the world and many people are ending up losing their jobs.