Nearly 200 Toronto-area Muslim homeowners face an uncertain future after the company holding their mortgages was ordered into receivership.

Since 2005, UM Financial has offered loans and mortgages to people who want to adhere strictly to Islamic law (Shariah), under which no interest can be charged on a loan.

On Oct. 7, however, UM financial was ordered to go into receivership by the Ontario Superior Court after the credit union it partnered with wanted to end their relationship.

Central 1 Credit Union provided financing for UM, which in turn charged a fee for providing mortgages — a sum higher than what borrowers would usually pay at market rates — in lieu of interest on home loans.

Some devout Muslims are willing to pay these fees, and the credit union and UM then split the profits from the fee.

Muhammad Robert Heft signed up for a mortgage with UM Financial Inc. four years ago. CBC

But earlier this year, Central 1 started an application to put the UM portfolio into receivership, saying it didn't have confidence in UM's business model or ability to pay money back.

In September, Central 1 pointed to a number of instances in which payouts owed to it from UM from discharged mortgages were delayed or not paid at all, and successfully applied for UM to go into receivership.

That means that 180 households that have mortgages — valued at $32 million in total — with UM are left in the lurch with no idea what will happen to their homes.

Clients got Tim Hortons gift cards

"Our initial fears are ... they're going into receivership. Could we lose our home? And we just didn't know and you know, really still there hasn't been a whole lot of information coming from any of the parties," said one UM client who didn't want to be identified. He only learned UM had gone into receivership last week, and it came as a surprise.

Instead of getting clear answers from UM, they've been given conflicting information.

Omar Kalair, the founder and CEO of UM Financial, did not want to be interviewed by CBC News, but released a statement saying Shariah compliant products are "still an important and growing business."

But on Oct. 6, a day before the court put the company into receivership, Kalair wrote a letter to his clients announcing his resignation and to say "we have terminated our investment in your home for the first mortgage," with little additional information on what clients should do.

Omar Kalair declined to be interviewed by CBC News. Youtube

"We thank you for your business over the years," Kalair wrote, and included in the package two $5 Tim Hortons gift cards, a prayer mat and an English version of the Qur'an.

Kalair's letter to clients was accompanied by a note from the Multicultural Consultancy Canada Inc. (MCC), a body that provides guidance to UM on matters around Shariah financing. Mufti Yusuf Panchbhaya informs UM clients that his Shariah board has issued a religious opinion, also known as a fatwa, stating the mortgages with UMFI to be "null and void according to Shariah principles."

'A fantasy'

Further clouding the matter, Muhammad Heft, a UM client, received another letter which promised the mortgage would be discharged entirely.

"The idea of not owing anything and discharge I think is more of a fantasy. I mean ethically speaking I have no problem paying what I owe," said Heft.

"I think you'll find in our community most people are interested in making their payments and honouring their commitments."

The client who did not want to be identified is baffled.

"They're telling us don't make your payments, but from a legal aspect we don't know how that would impact us as well if all of a sudden we're in default. You know, could they take the house away from us?" he said.

The court appointed receiver, Grant Thornton Limited, told CBC News that homeowners are still obliged to make their payments and any effort to discharge mortgages is not authorized.

Grant Thornton has set up a hotline for anyone who wishes to ask questions about the situation: 1-866-448-5867.

With files from Nazim Baksh and Marivel Taruc