The CFPB And DOJ Has Sued A Developer For Targeting Hispanic Consumers With Predatory Loans And Misleading Ads
DOJ has sued a Texas developer Colony Ridge. The Department of Justice and the CFPB have alleged Colony Ridge specifically targeted Hispanic consumers with predatory lending practices and misleading advertising. In addition, the DOJ and CFPB claim the developer built inferior housing in an unlawful land deal.
The complaint against the Houston-area developer said it advertises almost exclusively in Spanish. The company utilizes TikTok or other social media posts featuring national flags and regional music from Latin America.
The complaint alleges Colony Ridge lured tens of thousands of Hispanic consumers into their predatory loan scam. Public land records from September 2019 through September 2022 show that Colony Ridge initiated foreclosures on at least 30% of seller-financed lots. The compaint states most loan failures occurred even sooner. Nationally, 2.1% of home loans originated in 2019 became delinquent by 60 days or more.
Public records also confirm that Colony Ridge accounted for more than 92% of all foreclosures recorded in Liberty County between 2017 and 2022.
Colony Ridge CEO John Harris called the lawsuit, “baseless and both outrageous and inflammatory.”
The Complaint Against Colony Ridge Is Pretty Damning
The complaint also states Loan Originator Services, LLC has originated all of Colony Ridge’s seller-financed mortgages since 2016. Under this arrangement, Colony Ridge Land is still recorded as the lender on filings with the county. Colony Ridge also services the seller-financed loans.
The DOJ also alleges that Loan Originator Services failed to assess borrowers’ ability to repay the loan. The company also failed to request proof of income or liabilities from borrowers.
Colony Ridge also allegedly profits from its seller-financed mortgages by charging high interest rates and imposing late fees. Additionally, they accrue income from down payments and mortgage payments. In addition, they also profit from other fees for land that is often not viable for the consumers’ use.
Colony Ridge also refused to establish remedial payment plans or discuss refinancing options with homeowners. Colony Ridge frequently imposes draconian late fees. Thus, exacerbating the borrowers’ challenges in repaying their loans. This practice leads to loan defaults.
As a result, Colony Ridge can engage in property “flipping.” This flipping involves repurchasing properties in foreclosure and reselling them. Colony Ridge then can sell the properties at increased prices. Thus, starting the cycle all over again with new consumers.
Public records show Colony Ridge flipped at least 40% of all properties it sold between September 2019 and June 2023. Records also indicate 8,237 properties were sold twice and 3,267 properties sold three times. In addition, 2,067 properties sold four or more times.
The Colony Ridge neighborhoods also caught the attention of right-wing media outlets. The outlets alleged Colony Ridge attracts undocumented immigrants. As a result, the Texas legislature passed a bill authorizing up to $40 million for state trooper patrols in the Colony Ridge area.