Justice Department and CFPB Sue Colony Ridge in Land Sales Scheme Targeting Hispanic Borrowers
The Justice Department and Consumer Financial Protection Bureau (CFPB) have jointly filed a lawsuit against Colony Ridge, a Houston-based company, accusing it of operating an illegal land sales scheme that specifically targeted tens of thousands of Hispanic borrowers. The lawsuit alleges that Colony Ridge used false statements and predatory loans to exploit vulnerable consumers.
According to the complaint, Colony Ridge engaged in deceptive practices, including misleading advertising on platforms like TikTok, to lure potential buyers into its Terrenos Houston and Terrenos Santa Fe subdivisions. The company allegedly misrepresented the properties, falsely claiming that they had water, sewer, and electrical infrastructure in place. However, after non-refundable deposits were paid, borrowers were informed in English-only documents that these services might not be available.
The lawsuit also contends that Colony Ridge sold flood-prone land without adequate infrastructure, leaving borrowers with properties susceptible to flooding and raw sewage issues. The company allegedly targeted Spanish-speaking consumers, conducting most of its marketing in Spanish while providing important transaction documents only in English.
Attorney General Merrick B. Garland emphasized the discriminatory nature of Colony Ridge’s practices, stating that the company exploited language barriers and engaged in predatory lending, harming families and neighborhoods. The lawsuit seeks redress for affected borrowers and an immediate halt to Colony Ridge’s alleged illegal activities.
U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas highlighted the use of modern social media applications by Colony Ridge to mislead consumers, exploiting the longstanding immigrant dream of homeownership. The lawsuit aims to bring justice to Hispanic families who fell victim to Colony Ridge’s alleged predatory lending practices and serves as a warning to vulnerable individuals about such lenders.
The complaint alleges that Colony Ridge deliberately targeted Spanish-speaking borrowers through advertising and marketing, promising an easy path to homeownership with seller financing that required no credit check and only a small deposit. However, the loans offered by Colony Ridge reportedly had exorbitant interest rates, contributing to a high foreclosure rate.
The Justice Department and CFPB are seeking to end Colony Ridge’s alleged unlawful conduct, provide relief for affected consumers, and impose civil penalties. This lawsuit is part of the Justice Department’s Combating Redlining Initiative, addressing illegal lending practices that deny communities of color equal access to loans and lending opportunities.
Enforcement Action
The complaint alleges that defendants unlawfully discriminated against applicants on the basis of their race or national origin in violation of the Fair Housing Act (FHA). Under the FHA, the Justice Department has the authority to take enforcement action against real estate companies, lending institutions and other entities whose practices discriminate in residential real estate-related transactions, the availability of housing and housing-related services. The complaint also alleges that defendants unlawfully discriminated against applicants on the basis of their race or national origin in violation of the Equal Credit Opportunity Act (ECOA) and its implementing regulation, Regulation B. Both the Justice Department and CFPB have the authority to enforce ECOA. Additionally, the complaint alleges defendants’ deceptive acts and practices violate the Consumer Financial Protection Act of 2010 (CFPA) and the Interstate Land Sales Full Disclosure Act (ILSA) and its implementing regulations, Regulation K and Regulation J, all of which CFPB enforced.
The complaint seeks to stop Colony Ridge’s alleged unlawful conduct, provide relief for affected consumers and impose a civil penalty payable to the CFPB victims relief fund. If the defendants are found liable, the amount of any restitution will be determined in the litigation in federal court.
Anyone who believes they have been harmed by the practices of Colony Ridge Development LLC, Colony Ridge BV LLC, Colony Ridge Land LLC and Loan Originator Services LLC should call the Justice Department’s Housing Discrimination Hotline at 1-833-591-0291, press 1 for English, then 3 for fair lending and then 1 for Colony Ridge Lawsuit to leave a message. For the Spanish Hotline, callers should press 2 for Spanish, then 3 for fair lending and then 1 for Colony Ridge Lawsuit to leave a message. Individuals can also send an email to ColonyRidge.Lawsuit@usdoj.gov.
This lawsuit is a part of the Justice Department’s Combating Redlining Initiative. Redlining is the illegal practice where lenders deprive communities of color from equal access to loans and lending opportunities. Reverse redlining occurs when lenders target communities of color with inflated interest rates and/or other unjust lending terms. Both practices prevent communities of color from achieving sustainable homeownership and both deny these communities the opportunity to build wealth.
The Combating Redlining Initiative is the Justice Department’s most aggressive and coordinated enforcement effort to address all forms of redlining. Since 2021, the Justice Department’s Combating Redlining Initiative has secured over $100 million and 10 settlement agreements with banks and mortgage lending institutions to provide credit opportunities to communities of color in Houston; Memphis, Tennessee; Philadelphia; Camden, New Jersey; Wilmington, Delaware; Newark, New Jersey; Los Angeles; Columbus, Ohio; Tulsa, Oklahoma; Rhode Island; and Jacksonville, Florida. The Department has partnered with U.S. Attorneys’ Offices, federal financial regulatory agencies, including the CFPB and state Attorneys General offices to enforce federal fair lending laws that prohibit redlining. This lawsuit is the first reverse redlining action under the initiative.
