The federal government is suing Texas developer Colony Ridge, alleging it operated an illegal land sales scheme that targeted tens of thousands of Latino buyers through false statements and predatory loans.
The U.S. Justice Department and the U.S. Consumer Financial Protection Bureau filed the lawsuit on Wednesday in the Southern District of Texas. The move follows an investigation by the Houston Landing, an independent news organization, which found the developer had reacquired 45% of the 35,000-plus properties it had sold since 2012.
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The Landing reported that residents had returned 15,759 properties to Colony Ridge over the last decade, “reflecting how thousands of people have had their dreams of homeownership stripped away from them.â€
Atty. Gen. Merrick Garland said in a statement that the government’s “complaint alleges that Colony Ridge targeted Hispanic consumers with predatory loans, misled borrowers about the water, sewer and electrical infrastructure on its lots, and exploited language barriers by conducting most of its marketing in Spanish while offering important transaction documents only in English.â€
The federal government says the developer has violated the Equal Credit Opportunity Act, the Fair Housing Act, the Consumer Financial Protection Act and the Interstate Land Sales Full Disclosure Act.
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Colony Ridge Chief Executive and President John Harris said in a statement that he was “blindsided by this lawsuit,†calling it “baseless and both outrageous and inflammatory.â€
“Our business thrives off customer referrals because landowners are happy and able to experience the American Dream of owning property. We loan to those who have no opportunity to get a loan from anyone else and we are proud of the relationship we have developed with customers. We look forward to telling the true story of Colony Ridge,†he added.
The Colony Ridge subdivision became the focus of Texas politics this fall after conservative media labeled it a “magnet for illegal immigrants†and cartel activity.
In response, Republican Gov. Greg Abbott addressed Colony Ridge in his special legislative session agenda. Lawmakers toured the community, with sheriff’s officials pushing back against claims of extensive crime in the area. This week, Abbott signed a bill that allows the state to spend millions for increased law enforcement presence in Colony Ridge.
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The company has developed more than 40,000 lots spread across six residential subdivisions in Liberty County, Texas, and has lured Latino consumers to commit to loans they couldn’t afford under the guise of “achieving the American dream,†according to the lawsuit.
The lawsuit states that Colony Ridge benefits from “seller-financed mortgage failures through the high interest rates it charges†and through “the late fees it assesses as consumers fall behind on their payments.â€
Colony Ridge advertises almost exclusively in Spanish and has marketed its lots on Instagram and TikTok, using regional music and the national flags of Colombia, Honduras, Mexico and Venezuela, according to the suit.
Instagram accounts linked to Colony Ridge continued to advertise on Wednesday, with one post for its Terrenos Houston lots claiming: “El lugar donde el sueño de ser PROPRIETARIO si es posible.†(“The place where the dream of being an OWNER is possible.â€)
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Another post advertising Terrenos Houston on Wednesday said: “¿Quieres tu propio rincón en #estadosunidos? .... ¡Construye tus sueños de propriedad ahora! (“Do you want your own corner in the United States? .... Build your property dreams now!â€)
Colony Ridge advertises that its lots are sold with the infrastructure to connect water, sewer and electrical services, but that is not the case, according to the suit. Instead, the Justice Department states, “Colony Ridge sells unsuspecting families flood-prone land without water, sewer or electrical infrastructure.â€
Kristen Clarke, the Justice Department’s assistant attorney general for civil rights, said that instead of delivering on the promise of achieving the American dream, Colony Ridge “has delivered a nightmare for thousands of hardworking Hispanic families who hoped to build their homes in the Terrenos Houston community.â€
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