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Wed 30 Jun 2010 04:55 PM

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Dubai's Tamweel wins the right to repossess 5 homes

Dubai-based Islamic mortgage company 'owns the properties now'.

Dubai's Tamweel wins the right to repossess 5 homes
GLOBAL DOWTURN: Real estate prices in Dubai fell by about 50 percent because of the financial crisis. (Getty Images)

Tamweel, Dubai’s second-biggest Islamic mortgage company by assets, won the right to repossess five homes after their owners left the country.

“We have received a number of favorable judgments from the court against the customers who owe us money,” Hamid Chinoy, group chief corporate services officer at Tamweel, said by telephone on Tuesday. “Basically, Tamweel owns the properties now.”

Tamweel has several other cases in the courts and plans to file more, Chinoy said. The lender filed its first cases in November. Tamweel said in January that about 3 percent of its mortgages were in default.

Real estate prices in Dubai fell by about 50 percent because of the financial crisis, prompting some homeowners to stop paying off their mortgage and leave the country. Barclays Plc won Dubai’s first foreclosure cases in court under a 2008 mortgage law, setting a precedent for lenders holding about $16 billion of Dubai home loans to take action when borrowers default.

Under the law, foreclosed properties financed by conventional mortgages must be sold by the lender in a public auction. However, for Islamic mortgages, “it is possible public auctions won’t be necessary, but we are still working on the execution process,” said Jody Waugh, a partner at Al Tamimi & Co. in Dubai, the law firm that advised Tamweel.

Tamweel’s judgments “are a positive step and we are working with the execution department and the lands department to execute the judgment,” Waugh said. “The judgment itself is not the final step.”

Al Tamimi has already obtained 10 to 12 successful judgments for the enforcement of Islamic finance documents, known as Ijara, Waugh said. None of the judgments has been carried out yet.

Tamweel was informed of the judgments on June 24.

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Noori 10 years ago

If the mortage is truly islamic, then there should be sharing in either profit or loss, no question of default

Mohammad 10 years ago

Now we are in tough financial downturn & we should get flexibility from TAMWEEL or any other finance house. But instead of giving better options, TAMWEEEL has increased the profit or interest rate by 0.5%. So now I need to pay extra amount than before. Who can help us? Thus people are forced to defaulting...

Blackberry 10 years ago

“Basically, Tamweel owns the properties now.”??? It wasn't ever considered collateral in the first place. Under Ijara (islamic finance) the property always remains under the ownership of the bank. It's simple - Ijara means lease, not loan. The property is purchased by the bank in their own name and leased for long-term to the 'lessee' (borrower), with the condition that the bank shall transfer the ownership of the property once the lease payments have been cleared in total. The 'lessee' doesn't owe anything to the bank as suggested by Ms. Chinoy of Tamweel, since the 'lessee' never took anything from them in the first place. The money was paid to the developer and the property was owned by the bank. So, where is the question of debt?? I repeat - it's a lease, not a loan. And, as advocated by reknowned scholars worldwide, islamic banking advocates sharing in profit & loss, since 'lending' as such is not allowed in islam and this kind of banking is done in the way of an 'investment'. So, once again, truly there should be no question of default as Noori suggests.

gordon 10 years ago

If Tamweel is indicative of the entire market then we have about aed 600 million in mortgage defaults in Dubai. I doubt that this will decrease, increase is more likely as prices continue to drop and more and more people have difficulty meeting payments. These properties will eventually be brought to the market at a discount, I feel sorry for the people that are suffering, but the market has to adjust to a fair price.

simran 10 years ago

This sounds nice for banks and financila instititutions , what happens to customers on the other side , we have paid 50% of our unit value to the developer , the amount is kept in escrow the project is not going ahead for the last five years . why is amlak or tamweel not opening their mouths and stating to RERA that this month belongs to the end user whose unit has not been given nor is the project moving , pls work hand in hand and close it . I am sure it is not allowed to keep money of someone else without paying them interest for 4 - 5 years . i have lost my job thanks to this mess , my passport is stuck the developer refuses th cancel and the escrow account money is not being released . can tamweel and amlak sort these cases sitting across with RERA .

Noori 10 years ago

This means that all the payments made by the borrower became zero, I am sure if the lessee would have only rented the property he would have paid a lot less in monthly payments