Bill Pulte launches probe into Sharia-compliant financing at Fannie Mae and Freddie Mac

Bill Pulte, the Director of the Federal Housing Finance Agency (FHFA) and chairman of the boards for Fannie Mae and Freddie Mac, has announced an investigation into claims regarding Sharia-compliant home financing. The probe follows reports that the two government-sponsored enterprises provide liquidity for mortgage products designed to comply with Islamic law.

These financing arrangements, such as “Musharaka Islamic Finance Mortgages,” typically utilize co-ownership structures rather than traditional interest-bearing loans to avoid riba (interest). Documentation suggests that Fannie Mae and Freddie Mac have participated in these secondary-market transactions for years, with private firms like Guidance Residential involving the agencies as investors in Islamic co-ownership financing.