The U.S. Department of Justice (DOJ) announced Tuesday that it reached a $68 million settlement with a Houston-based land developer and lender accused of running a predatory scheme targeting Hispanics.
The DOJ alleged that Colony Ridge Land LLC’s targeting of Hispanics violated the Equal Credit Opportunity and the Fair Housing acts. The company’s alleged deceptive lending practices exploited the language barrier and created a cycle of foreclosures, according to a news release.
The Equal Credit Opportunity Act, enacted in 1974, bars creditors from discriminating against applicants based on race, religion, sex, marital status, age, or if they rely on public assistance income. Similarly, the Fair Housing Act, which took effect in 1968, prohibits discrimination by direct providers of housing, including landlords, real estate companies, homeowners insurance companies, and banks or other lenders.
Because Colony Ridge specifically targeted Hispanics, the lawsuit alleged, the company engaged in unlawful discrimination in violation of these acts.
“Intentionally targeting vulnerable borrowers with the American dream of homeownership and then trapping them in a predatory scheme is not only wrong, it also violates our civil rights laws,” Assistant Attorney General Harmeet K. Dhillon said in the news release. “This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration.”
The Colony Ridge community is a 33,000-acre unincorporated residential area in Liberty County, Texas, which is roughly 40 miles northeast of Houston. It’s also known as the Terrenos Houston community, an alleged safe haven for illegal immigrants.
However, he also acknowledged in October 2023 that the company does sell to noncitizens.
But the DOJ said the investigation by its Civil Rights Division did find evidence showing the land developer intentionally targeted Hispanic consumers with a deceptive, predatory scheme using misleading ads and sales methods. The news release said Colony Ridge Land LLC also allegedly misrepresented flood risks for its developments.
Other deceptive tactics were allegedly used as well, such as advertising mostly in Spanish but conducting important transactions and documentation in English.
Colony Ridge did not immediately respond to a request for comment, but its CEO called the allegations “baseless and both outrageous and inflammatory” in December 2023 after the announcement of the initial DOJ lawsuit.
Colony Ridge Land LLC and its affiliate allegedly employed seller-financed loans without checking if the borrower had the ability to repay, which significantly increased the chance of default, resulting in high foreclosure rates, the DOJ said.
Of the total $68 million settlement, Colony Ridge will invest $48 million in infrastructure improvements. Specifically, $18 million will go toward drainage issues that caused severe flooding damage to homes. The remaining $30 million is for other infrastructure improvements.
Another $20 million is for increasing law enforcement presence and effectiveness in Colony Ridge developments.
“The changes required by this settlement will promote public safety, and affordable and sustainable homeownership in America, key priorities of this Administration,” Assistant Attorney General Dhillon said in a Feb. 10 statement.
Colony Ridge also agreed to address its misrepresentation of properties to consumers and to accurately represent their conditions. The company will also require purchasers to have an unexpired Texas-issued driver’s license, identification card, valid passport, or visa renewed after Jan. 1, 2025.
In possibly the most consequential term of the settlement, the company agreed to pause the development of new residential plots meant for direct-to-consumer sales for three years.
The settlement resolves the lawsuit first filed in December 2023 by the DOJ’s Civil Rights Division and the Consumer Protection Bureau and also concludes a subsequent 2024 suit filed by the State of Texas Office of the Attorney General.
