Texas-Based Housing Developer Accused of Targeting Hispanic Borrowers in Predatory Lending Scheme, Lawsuit Says


Washington — A Texas-based housing developer and mortgage lender is accused of targeting members of the Houston-area Hispanic community by offering loans to people who couldn't pay them, selling them dilapidated land and taking advantage of language barriers.

Prosecutors allege that Colony Ridge Development, LLC and its subsidiaries carried out a predatory lending scheme in which foreclosures were part of the business model, according to a federal lawsuit filed Wednesday.

The developers, who managed more than 40,000 lots on 33,000 acres, were sued by the Justice Department on Wednesday in what was the first effort by civil rights prosecutors to confront predatory mortgage lending in the United States.

Ridge Immigration Colony
File: A model home at the Colony Ridge development on Tuesday, October 3, 2023 in Cleveland, Texas. David J. Phillip / AP

Investigators say tens of thousands of potential buyers from the Hispanic community were lured to purchase land in Colony Ridge with targeted ads in Spanish on TikTok and other social media platforms. Some of the marketing falsely advertised that the land had utility connectivity, according to the civil suit, when it did not, and other land that was sold was prone to flooding and raw sewage runoff.

Once buyers became interested in the land, prosecutors said Colony Ridge directed clients to loan schemes it controlled.

“Despite making loans totaling tens of thousands of dollars, Colony Ridge fails to evaluate borrowers' ability to repay, requiring reported (but unverified) gross income and a nominal down payment,” prosecutors alleged in court documents. The company and its Houston-based lender did not determine whether borrowers were financially able to obtain and repay a loan.

And if the owners couldn't keep up with loan payments, the lawsuit alleged that the developer seized the land and sold it to other clients for a profit.

“When borrowers lose their properties to foreclosure, Colony Ridge completes the life cycle of the scam by purchasing the properties back for pennies on the dollar and reselling them at even higher prices to unsuspecting new borrowers,” the Attorney General said Wednesday. Attached Kristen Clarke, adding that The Department of Justice is seeking compensation for victims of the alleged scheme.

Colony Ridge operated as a “one-stop shop for discriminatory lending,” Clarke alleged.

Colony Ridge CEO John Harris said in a statement that the company was “surprised by this lawsuit and we are concerned that the Department of Justice will take this action.”

Harris called the lawsuit “baseless,” “outrageous and inflammatory,” and said, “Our business thrives on customer referrals because homeowners are happy and able to experience the American dream of homeownership.”

“We lend to those who do not have the opportunity to obtain a loan from anyone else and we are proud of the relationship we have developed with customers,” he added.

Loan Originator Services, which is named in the lawsuit, said in a statement that the Consumer Financial Protection Bureau “appears to be uninformed about the law applicable to land sales, as well as the facts surrounding Loan Originator Services' involvement in these land sales.” The company said it “looks forward to explaining why these land sales are legal and appropriate for customers” and expressed confidence that the lawsuit will be dismissed once the government “understands what really occurred.”

Federal prosecutors and regulators alleged that the predatory lending scheme described in court documents violates federal law and said they are warning community members about the allegations.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *