Cosigning and Similar Concepts It is definitely permitted for a Jew to co-sign as a standard Arev (guarantor) on a loan initiated by a public company. Being that the terms are that the lender will turn to the borrower for payment first, he is considered the borrower and the cosigner is merely guaranteeing the loan in the event of default. On the other hand, an Arev of the … [Read more...]
Ribbis: Matters of Interest
AREV: GUARANTEEING A LOAN (COSIGNERS) In certain instances, where a home buyer does not meet underwriting criteria, the bank may require a cosigner to guarantee the loan. The current practice of banks is to stipulate that they can collect from either the borrower or guarantor at their own discretion. Such a guarantor is referred to in Halacha as an “Arev Kablan” (equally … [Read more...]
Matters of Interest
JEWISH MORTGAGE COMPANIES When a person obtains a mortgage from a Jewish lender, a Heter Iska is necessary. However, many Jewish mortgage companies are merely brokers for non-Jewish banks and not the actual lenders. One may obtain a loan through the services of a brokerage company without an Iska agreement, provided that the bank that is providing the funds for the loan is … [Read more...]
Matters of Interest: Ribbit and Heter Iska
HETER ISKA II There are two basic types of Heter Iska that are written today; one is a “Hatzi Milveh Hatzi Pikadon” (half loan/half investment) and the other is a “Kulo Pikadon” )all investment). As a rule, money for which the recipient takes responsibility, is considered a loan, while money he is not responsible for is viewed as an investment. In a half loan/half … [Read more...]
Avissar Family Ribbis Initiative: Ribbit and Heter Iska
What is a Heter Iska? Part I The Mitzva to lend is fulfilled when one lends without charging interest. If one’s business lends with interest he must ensure to structure a valid Heter Iska. Assuming the Heter Iska was executed in a proper fashion, he does not transgress an Issur of Ribbit. However, the Hafetz Hayim gives two reasons why it is preferable to lend without using … [Read more...]