Civil Rights Division Secures $68M Settlement in Predatory Land Sales and Lending Lawsuit

The Justice Department announced today that Colony Ridge Land LLC and its affiliates (Colony Ridge), a land developer and lender near Houston, TX, have agreed to pay $68,000,000 to resolve a lawsuit alleging that Colony Ridge targeted Hispanic borrowers with a predatory land sales and lending scheme that led to a cycle of foreclosures and financial hardship in violation of the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA).

"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. This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration," said Assistant Attorney General Harmeet K. Dhillon of the Justice Department's Civil Rights Division. "The changes required by this settlement will promote public safety, and affordable and sustainable homeownership in America, key priorities of this Administration."

The Civil Rights Division's investigation found that Colony Ridge intentionally targeted Hispanic consumers with a deceptive bait-and-switch, predatory scheme that used misleading advertisements and sales tactics, including misrepresentations about flooding risks. Colony Ridge also used seller-financed loans without verifying a borrower's ability to repay, significantly increasing the possibility of default and resulting in high foreclosure rates.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department's Civil Rights Division and the State of Texas's Office of the Attorney General. The settlement resolves a December 2023 lawsuit filed by the Civil Rights Division and the Consumer Financial Protection Bureau and a March 2024 lawsuit filed by the State of Texas Office of the Attorney General.

Under the settlement, defendants have agreed to:

• Invest $48 million in infrastructure improvements, with $18 million specifically invested in drainage infrastructure to address severe and costly flooding damage to homes, and $30 million towards other general infrastructure improvements;
• Increase housing affordability by adopting underwriting standards that assess borrowers' ability to repay their Colony Ridge lot loans through consideration of borrowers' income, assets, and debt;
• Preserve homeownership by developing a policy to meaningfully reduce the number and frequency of foreclosures and deeds in lieu of foreclosures;
• Protect homeowners by developing a default avoidance plan to help borrowers avoid defaulting on their Colony Ridge lot loans and to meaningfully reduce the overall default rate;
• Protect borrowers by developing a plan to address harms to borrowers' credit because of reports made by Colony Ridge for all borrowers who have defaulted on a Colony Ridge lot loan;
• Address misrepresentations to consumers by ensuring honest and accurate advertisements that truthfully and accurately describe the properties for sale and applicable loan terms;
• Represent accurately the state of properties by providing pre-sale disclosures that accurately state whether a property is "move in ready" or currently has "all city services" such as immediate access to all utility services;
• Invest $20 million in increased law enforcement presence to ensure the safety of residents by coming into compliance with local, state, and federal agreements and to increase law enforcement presence and effectiveness in the Colony Ridge developments;
• Utilize ILSA's intrastate land sales exemption and require purchasers to present an unexpired Texas-issued driver's license, a Texas-issued identification card, a limited-term Texas-issued driver's license issued after January 1, 2025 or an unexpired passport and valid visa issued or renewed after January 1, 2025; and
• Halt development of new residential plats for direct-to-consumer sales for three years.

More information about the Civil Rights Division and the laws it enforces is available at https://www.justice.gov/crt.