University Bank Signs $100,000,000 Sharia'a Home Acquisition Master Commitment With Freddie Mac

Stephen Lange Ranzini, President and Chairmanof Ann Arbor's University Bank (NASDAQ: UNIB), announced that it hasentered into a master purchase agreement with Freddie Mac (NYSE: FRE) tocreate a secondary market for Sharia'a compliant loans to assist in homeacquisitions by Islamic homebuyers. The loan utilizes the Murabahastructure, which is a form of installment credit sale. The agreement callsfor Freddie Mac to support $100,000,000 in Sharia'a compliant andconventional mortgage transactions over the next year. Monthly purchaseinstallment payments on Islamic installment credit contracts originatedunder this master commitment will be comparable to those required underconventional secondary market mortgage transactions. The Murabaha programwill be available initially only in Michigan.

Chartered by Congress in 1970 to bring stability, liquidity andaffordability to American home financing, Freddie Mac is one of thenation's largest investors in residential mortgages. Ranzini commented,"Having a major Government Sponsored Enterprise backing our Islamic Bankingactivities in such a significant way represents a key milestone inUniversity Bank's Islamic Banking activities and gives us access totremendous resources. We intend over the coming months to expand ourgeographic footprint into additional states with the ultimate goal ofoffering Islamic mortgage alternatives nationwide under future amendmentsto our agreement with Freddie Mac."

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"Today's announcement builds on Freddie Mac's commitment to help America'sincreasingly diverse communities achieve homeownership," said IlianaGhanem, vice president of community lending at Freddie Mac. "By supportinga wide range of Islamic home financing models, Freddie Mac is realizing itsmission to foster homeownership opportunities in new and exciting ways."

University Islamic Financial Corporation (UIFC), which is the first IslamicBanking subsidiary to be formed in the United States, engages in IslamicBanking with an initial focus on its existing product set: solicitingIslamic Sharia'a FDIC-insured Deposits held by University Bank, originatingIslamic Sharia'a compliant mortgage alternatives and selling Sharia'acompliant equity mutual funds through its sister company, UniversityInsurance & Investment Services. UIFC's products have received favorablelegal rulings (fatawa) from some of the leading Islamic legal scholars inthe U.S. and the world.

For additional information about UIFC's Sharia'a compliant products and itsfatawa, see www.university-bank.com/IslamicBanking.

Additional comprehensive investor relations information on UniversityBancorp is available at www.university-bank.com/bancorp.htm.

Ann Arbor-based University Bancorp owns 100% of University Bank whichmanages a total of $3.35 billion in assets. University Bank is anFDIC-insured, locally owned and managed Community Bank primarily servingthe cities of Ann Arbor and Ypsilanti of Washtenaw County. The CommunityBanking operation focuses on local businesses, minorities and thenon-profit communities. University Bank is the only financial institutionheadquartered in Washtenaw County to be rated "Outstanding" by the FDIC forCommunity Service and Community Reinvestment. Other Community Bankingspecialties include highly competitive deposit products for businessowners, residential mortgages, commercial real estate lending andinsurance, investments and money management through its wholly ownedsubsidiary University Insurance & Investments, Inc. In addition to itsCommunity Banking operations, University Bancorp specializes in IslamicBanking through 80%-owned University Islamic Financial Corporation and alsoin mortgage subservicing and mortgage origination primarily serving creditunions through the Bank's Houghton-based 80%-owned subsidiary, Midwest LoanServices.

Any prediction of the future is inherently not assured. Investors shouldread the risk factors listed on pages 21 and 22 in the Company's report onForm 10K for the year ended December 31, 2004 and any prediction in thisrelease is intended to be covered by the Safe Harbor provisions of Section21E of the Securities Exchange Act of 1934.

Contact:John Sickler, VPUniversity Islamic Financial Corporation734-741-5858, Ext. 242Email: Email Contact

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