Minnesota real estate broker Chad Banken testified in court about his business practices, which are under scrutiny for allegedly predatory home sales and discriminatory practices. Banken’s company has sold over 160 homes using contracts for deed, an alternative to conventional mortgages that offers fewer consumer protections.

Allegations of Discrimination

Prosecutors with the Minnesota Attorney General’s Office questioned Banken about his business practices, including allegations that he discriminated against Muslim homebuyers in violation of the Minnesota Human Rights Act. Banken is also accused of falsely telling clients that his contracts did not include interest, which is generally forbidden under sharia law in Islam.

Abdinoor Igal, a homebuyer, testified that he bought a $727,000 home in Lakeville from Banken in 2022. Banken had acquired the home for just under $638,000 and tacked on a nearly $90,000 markup. Igal ended up losing his home and moving his family to Kenya after being unable to afford his monthly payments.

Contract for Deed Program

Banken’s contract for deed program has been popular with Muslim families who follow Islamic practices and avoid interest payments in the pursuit of homeownership. However, prosecutors allege that the program is designed to take advantage of these families, with exorbitant markups and limited consumer protections.

Julian Fernandez Luchi, another homebuyer, testified that he and his partner wanted to buy a home in the spring of 2024. They used Luchi’s contractor business to purchase the home, but later discovered that the terms of the loan had changed, and they were required to pay off the loan in five years instead of 30.

Original reporting: Sahan Journal — read the source article.