NEW YORK (JTA) — If you’re an Orthodox Jew with a mortgage from Quicken Loans, you might be in trouble.
Agudath Israel of America, a major haredi Orthodox organization, issued a Jewish legal ruling last month prohibiting Jews from taking out loans from the Detroit-based company because it is majority-owned by Jews. Quicken Loans, which claims to be America’s largest mortgage lender, also owns Rocket Mortgage, the online mortgage agency.
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.
“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,” said the Agudath Israel ruling, using a Hebrew term for the biblical commandment against interest.
So what do Jews do if they want to lend each other money — say, in Israel, where most businesses are owned by Jews? There is a way out.
In the Middle Ages, rabbis devised a contract called a “heter iska,” or business permit, that technically transforms the loan into a co-investment. Instead of being a lender and a borrower, the two parties are now “business partners,” where one supplies the capital and the other uses it as they see fit.
Agudath Israel says Jews can keep using Quicken Loans — that is, if they sign a heter iska.
On Monday, Quicken responded to a query saying it was open to the idea.
“Over the next 30 days, Quicken Loans will assemble a committee 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. I am confident that this can and will be achieved,” said a statement attributed to Dan Gilbert, chairman of Rock Holdings, Quicken’s parent company. Gilbert, a Detroit native, also owns several sports franchises, including the Cleveland Cavaliers.
Agudath Israel is resolute on the issue: no heter iska, no Quicken Loans mortgage. And if you’re an Orthodox Jew with an existing Quicken Loans mortgage? Too bad. You need to dissolve it and start over.
“The rabbis of the Conference felt an obligation to let the public know… that loans can only be taken out from the company with a valid hetter iska,” Agudath Israel’s spokesman, Rabbi Avi Shafran, wrote in an email to JTA. “Existing loans should be dissolvable and re-created within a hetter iska framework to permit them.”
Rabbi Mordechai Frankel, director of the Institute of Halacha at Star-K, a kosher certification agency, said some smaller Jewish-owned banks are familiar with using the heter iska.
“There are small banks that are Jewish-owned that do have the heter iska,” he said. “If the person lives in an area with a large concentration of Orthodox people, the bank will become comfortable with the concept and become more open to it.”
Frankel doesn’t know whether Quicken would agree to the contract. But if not, he said, there are always the big banks — which are all, as far as he knows, kosher to lend money.