Federal agency targets predatory home deals preying on Somali Muslim refugees

The Consumer Financial Protection Bureau (CFPB) is cracking down on predatory home deals that have exploited Somali Muslim refugees in Minnesota.

Many low-income immigrants, who are unfamiliar with the formal homebuying process in the US or Islamic financing restrictions, are lured by sellers who offer interest-free deals.

Called “contracts for deed”, these can hide inflated home prices and lack essential protections. 

This leaves buyers with costly repairs and hidden fees to cover.

The Pew Charitable Trusts reports that about 1.4 million Americans were using contracts for deeds to buy a home in 2022.

Islamic scholar and chair of the Fiqh Council of North America Yasir Qadhi said for Somali Muslims in Minnesota, the contracts for deed hold appeal. 

That is because Islamic law bars paying or receiving money as interest on a loan.

CFPB Director Rohit Chopra is urging increased scrutiny and reporting of such deceptive practices.

Advocates stress the need for greater regulation to protect vulnerable communities and ensure fair lending practices.