February 22, 2024
Loans

DOJ Sues Texas Housing Developer for Preying on Hispanic Buyers With ‘Bait and Switch’ Loans


The U.S. Department of Justice and the Consumer Financial Protection Bureau filed a lawsuit Wednesday against a Texas-based land developer and lender for allegedly running a targeted predatory lending scheme against tens of thousands of Hispanic residents.

The lawsuit alleges that Colony Ridge LLC targeted unsuspecting Hispanic and Latino residents with high-interest, predatory loans that borrowers often couldn’t afford. As a result, roughly one in four Colony Ridge property loans ends in foreclosure, the CFPB said, accusing the company of repurchasing the homes and flipping them at a higher price.

“Our investigation uncovered that Colony Ridge is baiting borrowers with lies, saddling families with predatory loans for homesites that the company knows have repeatedly flooded with raw sewage and lacked basic utility infrastructure,” CFPB Director Rohit Chopra said in a statement.

Colony Ridge has overseen the development of more than 40,000 lots spread across 33,000 acres in Liberty County, located roughly 30 miles northeast of Houston.

Many of the homes have been sold to low-income and immigrant families in recent years, spurring unfounded anti-immigrant conspiracy theories that Mexican drug cartels have a foothold in the area.

The developer also regularly targets Spanish-speaking residents in the area, advertising mostly in Spanish on social media platforms and offering low-interest loans without a credit check.

Colony Ridge properties have accounted for more than 92% of all foreclosures in the county between 2017 and 2022, according to the CFPB. The developer also flipped at least 40% of all properties sold between 2019 and 2022, selling more than 2,000 homes four or more times in that three-year span.

“Colony Ridge promised the American dream, but we allege that in reality, it has delivered a nightmare for thousands of hardworking Hispanic families who hoped to build their homes in the Terrenos Houston community,” said Kristen Clarke, an assistant attorney general with the Justice Department’s Civil Rights Division.



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