Dream fulfilled helps Muslims realize theirs (3)

Living well

His ability to predict commodities prices eventually led him to create his own energy-trading firm and to be named to the board of a local bank. He came to live in one of Houston's biggest houses, in one of its best neighborhoods.

"I used to make a seven-figure salary and bonuses," Abdul-Rahman observes. "(But) by the 10th day of the month, our account was empty. My wife used to say: You must be married to somebody else. Where does the money go?"

His wife, Magda, says 70% of their income went to pay for their fancy house, which they financed with a conventional bank loan. Meanwhile, at bank board meetings, he grew uneasy after learning that some directors were defaulting on their loans to the institution.

It was 1983 and the Texas oil bubble was about to burst.

Convinced that a crack in property values would follow, Abdul-Rahman listed his house with a real estate agent for $565,000, even though an enraged neighbor was listing his at $800,000. The couple moved into an apartment.

"Our friends would come and weep and cry" over the apparent reversal of their fortunes, he says. Meanwhile, the neighbor's asking price fell by two-thirds.

Abdul-Rahman moved on to a job in Southern California as a private banker at Shearson Lehman, a predecessor of Citigroup Smith Barney, and he applied his money-raising skills to underwriting Muslim mosques and schools.

He launched Lariba with the help of about 20 Muslim investors who raised $200,000, enough to finance one interest-free mortgage. "I said, 'Put in $10,000 (apiece), and if I lose it, don't hate me for the rest of your life,' " he recalls.

In the early days, Lariba financed a home or car purchase only once every six months. But over time, Abdul-Rahman built a profitable business. The big breakthrough came in December 2002, when Fannie Mae pledged to purchase $10 million of Lariba's mortgages.

Fannie Mae account manager Colette Porter says Abdul-Rahman's efforts fit a broader trend. "Faith-based organizations have become trusted (financial) advisers in underserved communities," she says.

With Fannie Mae's support, mortgage loan applications at Lariba doubled from 27 a month in 2002 — to 54 a month in 2003, according to Federal Reserve data.

At Guidance, the climb was faster. Its mortgage applications soared nearly tenfold to 123 a month, totaling $278.9 million in 2003, up from just $22.4 million in 2002, its first year of business, according to the Federal Reserve. Mortgage applications don't constitute lending commitments, but most applications in the Muslim niche are funded, market analysts say. Through 2004, Guidance says, it has funded transactions totaling $400 million.

Due to this push, Muslim mosques, newsletters and TV channels now are abuzz with talk about Islamic finance. It convinces Abdul-Rahman that he is living the lead role in It's a Wonderful Life.

Next, he hopes to reach a broader market. "What we're trying to preach here is common sense," he says. "Live within your means. Never just follow the crowd."