Texas Attorney General Ken Paxton has filed a lawsuit against the developers of Colony Ridge, accusing them of deceptive trade practices, including sales, marketing, and lending practices that enabled their business model.
“Colony Ridge’s business model is predicated on churning land purchasers through a foreclosure mill,” reads the lawsuit filed on March 14. “Namely, Colony Ridge targets foreign-born and Hispanic consumers with limited or no access to credit with promises of cheap, ready-to-build land and financing without proof of income.”
As many as 50,000 people reside in the Colony Ridge development, which encompasses approximately 33,000 acres in Liberty County, about 30 miles northeast of Houston.
“Colony Ridge has been flagrantly violating Texas Law,” Mr. Paxton said in a statement. “The development profited from targeting consumers with fraudulent claims and predatory lending practices.”
“Roughly one-in-four Colony Ridge loans end in foreclosure, after which the company repurchases the properties and sells them to new borrowers,” the DOJ said in a press release in December.
Both lawsuits accuse Colony Ridge and its CEO, John Harris, of violating the Consumer Financial Protection Act.
‘Everyone Qualifies’
The development’s main sales website, TerranosHouston.com, advertises “easy” seller financing without proof of the buyer’s ability to repay the loan.“¡No se verifica crédito!” the website reads in Spanish, which translates to: “Everyone qualifies, no credit checked!” in English.
The 48-page lawsuit accuses Colony Ridge of supplying “dozens of SIM cards” to the digital marketing team to create “multiple fake social media accounts” to attract potential buyers.
Mr. Paxton’s office says Colony Ridge targets Spanish-speaking buyers, “many who do not speak English at all,” but it only provides legal documents in English.
Lawyers accuse the developers of misrepresenting land conditions, which often do not have the “promised infrastructure” to provide water, electricity, or sewer services.
“Once discovered, these conditions preclude the buyer from making practical use of the land,” according to the OAG. “The result is that the buyer, having discovered that they cannot meaningfully use the land, defaults on the land financing at jaw-dropping rates.
“Colony Ridge then forecloses on the buyer, re-possesses the land having lost nothing, and then turns around and sells the same land again to another unsuspecting buyer with the same deceptive set of misrepresentations.”
The development floods frequently during heavy rain, which has led to at least two lawsuits, according to court documents.
“Colony Ridge and John Harris continue to falsely represent to consumers at the time of sale that the residential lots in the Development are not subject to repeated flooding,” the filing reads.
The state’s lawyers argue that the development’s “alarming” 12 percent rate of foreclosure proves the company is operating under deceptive practices.
“Indeed, the proof of Colony Ridge’s scheme is in the pudding,” the state’s lawyers wrote, adding that “this alarming figure is roughly 50 times greater than the 2023 nationwide foreclosure rate of 0.26% (roughly 1 in every 400 homes were foreclosed in the United States in 2023).”
‘Nothing New’ Here
Mr. Harris has denied that his company has broken the law in its business dealings.“There is nothing new in the Texas Attorney General’s lawsuit,” he told The Epoch Times in an emailed statement. “Colony Ridge complies with the law. Full stop.”
He argues that Colony Ridge is helping people achieve the American Dream.
“Our customers buy land from us because they want to live here,” Mr. Harris continued. “They want a chance to build a home for themselves and their children but are shut out of just about every opportunity to do so—and we give them that chance. We cater to a segment of society that simply wants to experience the American dream, and we help them achieve that dream.
“We will be reviewing the specifics of this lawsuit with our attorneys and look forward to sharing the true story about Colony Ridge.”
