Source : mortgagebrokerschool.com
securitization ISLAMIC NEEDS more thoughts
It is a process of securitization has been widely used by institutions, the Islamic financial services (IIFSs) significantly for many years, especially for cash equivalence and marketability. In other words, the liquidation process Sukukization for a speedy, direct access to capital markets, the creation of secondary markets and risk segmentation – often referred to simply as Sukuk.
The whole process is organized or "securitized" by special purpose companies (SPVs) through a structured IIFS. Sheikh Taqi Usmani The Declaration (2008) explains most of Sukuk issued in the market defied Islamic rules has aroused strong emotions. For some, it seemed rather hastily and ill-considered and contrary to the demands of Islamic capital market. From the perspective of others, but it was not a great welcome and long awaited fresh air for the industry. Some critics,Doubts about the validity of a statement Sheikh Usmani argues that the personal opinion goes against the decision of the accounting and auditing of the Organisation for Islamic Financial Institutions (AAOIFI) on the eligibility of Sukuk as provided in its Shari'ah Standard 13 (resolution The Fiqh Academy of the securitization).
The views expressed in this article is that rather than contradict, AAOIFI Shari'ah Standard 13 on securitization and Sukuk Real ApplicationThe claims by respected scholars, Sharia Sukukization require real are actually both agree with each other, though not stated explicitly.
A more detailed analysis shows that the general structure of Sukuk by AAOIFI allowed theoretical models that are rarely or almost never followed by industry. Recognizing this fact, rather it is a conflict, Shari'ah scholars simply expressed the same opinion,although in different ways. In other words, the points of view, from what can not be done while AAOIFI confirms and completes the picture with AAOIFI Shari'ah explicitly in 17, which should be done.
Risk factors and eligible to issue sukuk
In short, non-Shari'ah compliant securitization, may not be framed, if not meet the strict conditions, the standard 17 and 13 (AAOIFI shown). So the most important conditions that together AAOIFI Sharia lawStandard 17, which Sukuk to be marketable, are not allowed for claims or debts, except in case of a business or financial institution to sell all its assets, or a portfolio with an Obligation financial standing, in which certain debts, incidental material goods or usufruct were unwanted, according to the guidelines contained under AAOIFI Shari'ah Standard (21) on financial documents.
A combination of a musharakah and Ijarah are one unit of a "contract".This concept is elaborated by an example. The person is interested in buying a house ("Home Owner"), the money, but not enough to make the purchase. The person then goes to a payer who gets into a musharakah with home owners to buy the house.
In this example, the parties have ownership of the property that was purchased. Both parties have the risk of depreciation of housing prices and the possibility of potential value gainAcquisition of immovable property. The relationship between ownership of the property equal to the ratio between the percentage of initial contribution, the first post of the sender, the amount of contribution by the transferor as a percentage of the total purchase price and the same way is done for the homeowner. Musharakah is the result of a symbiotic relationship between the homeowner and the author. Musharakah allows the landlord on a property that would have / have not they can do, buyWithout the cooperation of the author.
Musharakah allows the sender to serve as an investor, was later described in detail how the author has benefited from the partnership (Farhan, Malik 2010).
Z = total purchase value of the house
I = first post in the Home-Owner
Y = first post of the sender
Z = I + Y
I = first post in the Home-Owner
Y = first post of the sender
Z = I + Y
The second phase includes an Ijarah contract between the homeowner and the author. In this location, the owner Homeacts as a tenant and the sender (owner) for the use of 'author pays portion of the property. The rental rate is the form used Ijarah derived from normal market rates, which in turn are the product of a series of macro-economic factors. The landlord has the ability to make payments to purchase the property owned by the transferor to indicate it is an option and not an obligation for the landlord.
Since the lessor in Ijarah owns the leased Activities, he may sell the asset, in whole or in part, to a third party who can buy and the seller has the rights and obligations of the owner in respect of the acquired asset is replaced. (Muhammad Taqi Usmani, An Introduction to Islamic Finance), Next, we show how the Ijarah is put into a securitization vehicle.
SUKUKIZATION contracts UNIFIED TRUSTS
Musharakah and Ijarah are combined to form a contract. These contracts are then placed ina bankruptcy remote entity, ie the Unified Trust. Figure 3 shows the schematic of a series of contracts combined to form a unified Trust. Servicer is acting as agent on behalf of final investors and issuers to rent and collect repayments from the owner at home. In return, the operator applies a small fee, paid by the rental payments by homeowners (Farhan, Malik 2010).
As soon as the Unified Trust was formed, provides a number of securitiesEnd-investors. The titles that make the Unified Trust issued the Sukuk. Sukuk is guaranteed by the participation in the ownership and rental income that you receive regular income from Sukuk holders. The Issuer, the Company may fund or a bank is responsible for the origin of the contracts. The broadcaster also owns a share of the Unified Trust to ensure that the issuer and the end-investors have conflicts of interest. After 'shares in the Issuer Trust will ensure that unified the interests of the Issuer and the end investors are lined up.
The following figure shows the complete picture of labor Sukukization proposed structure. It starts with the sender (the issuer) are trained to work with individual homeowners to contract. These contracts are then placed in a trust Unified, which has owned the property in the bought shares and receiving a regular income from the house owner. The manager is responsible for payments and maintenance of this structure may be the same person of the Issuer. Unified Trust issues Sukuk securities representing ownership of shares purchased property and rental income for the enjoyment of the owners.
Conclusions and future prospects
The proposed structure Sukukization articles in this behaves like a mix of agency and non-agency mortgages. Bears the credit risk of similar non-Agency mortgage, but acts as an agency> Mortgage with respect to the vertical trenches.
In this article, a frame-work was created for the development of market structure Sukukization loan to finance the home page. Efforts have been made for all matters relating to the development of the housing market likely address Islamic securitization. The structure is entirely consistent with the injunctions of Islamic Sharia, while at the same time, taking advantage of progress made Western world for the development of a securitization market (Farhan, Malik 2010).
There are still some factors that need more work. If a significant appreciation in property prices would always be in the interests of homeowners are refinancing to repay the entire capital instead. Refinancing would result in revenue sharing ownership with the Unified Trust. This problem can be addressed by limiting the amount of a certain percentage each year without the possibilityImplementing it on us next year. For example, if the concept of Ijarah is 5 years, the maximum advance and could be set at 20% per year. This would ensure that both the homeowner and the interests of final investors, whether the appreciation of property prices.
Sukukization development of a stable structure for the housing market would benefit greatly, both home buyers and property investors. It would be home buyers access to adequate and no interestFinancing for the purchase of their homes. With a unified musharakah Trust as a partner would provide additional protection against default risk.
For real estate investors would enable them to make an investment in a relatively liquid product. It allows investors to the upside on property prices and the share of both regular and stable cash flows from Ijarah.
A very sophisticated real estate market would attract global investors who wantSharia-compliant investment without interest. This picture is in this article, which can be further enhanced by making available to suit the needs of a particular country or region. I will concentrate in the later part of trading in such Sukukization in the secondary market.
