- What's at stake: Colony Ridge will pay $48 million to improve infrastructure at its developments near Houston particularly flood control measures. No money is earmarked for harmed borrowers, however, who have a high bar to get relief under a default avoidance plan.
- Key insight: In a surprise move, the DOJ is requiring that the private developer pay $20 million to fund at least two police officers, build a law enforcement facility, and create a "peace officer," residency program.
- Expert quote: "This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration," said Harmeet K. Dhillon, assistant attorney general in the DOJ's Civil Rights Division.
The Justice Department and the state of Texas reached a $68 million settlement with the Houston developer Colony Ridge Development LLC that requires the private land developer to pay $20 million to boost law and immigration enforcement in its subdivisions.
Colony Ridge drew local
On Tuesday, the DOJ, Texas Attorney General's Office and the Consumer Financial Protection Bureau filed a
Harmeet K. Dhillon, assistant attorney general in the DOJ's Civil Rights Division, said the federal government will target companies that support illegal immigration.
"This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration," Dhillon said in a press release. Dhillon has faced significant scrutiny and backlash for her handling of Immigration and Customs Enforcement actions, including her
Regulators allege that
Under the settlement, the company will pay $48 million for infrastructure improvements, including flood control, roads, sewage and waste management. Of that amount, Colony Ridge agreed to commit $18 million "to reduce and prevent flooding, including drainage, stormwater, and related infrastructure," for specific developments.
The $20 million for increased law enforcement will fund construction of a police station operated either by the Texas Department of Public Safety or the County Constable within a subdivision called Terrenos Houston. The company also will pay for at least two additional full-time law enforcement officers over 10 years to patrol the development. It also agreed to create a peace officer residency.
Colony Ridge's CEO John Harris said he was happy to resolve the litigation.
"The settlement allows us to continue investing in our neighborhoods and supporting the thousands of families who have trusted us to provide a place for them to call home," Harris said. "We're glad that funds from this agreement will be directed back into the community to benefit residents."
Regulators described a scheme in which Colony Ridge set up borrowers for failure by charging high interest rates and fees, and then relied on frequent foreclosures to flip properties to new buyers, often at higher prices. The company has developed more than 40,000 residential lots on the outskirts of Houston over more than a decade.
The 2023
The $20 million for increased law enforcement will fund construction of a police station operated either by the Texas Department of Public Safety or the County Constable within a subdivision called Terrenos Houston. The company also will pay for at least two additional full-time law enforcement officers over 10 years to patrol the development. It also agreed to create a peace officer residency.
None of the money under the settlement is specifically earmarked for restitution to harmed customers. Instead, to obtain relief, borrowers must meet requirements of a
The default avoidance plan requires Colony Ridge to create an individualized assessment of any borrowers currently facing foreclosure to determine if they are eligible for relief. But the bar is high. Borrowers in foreclosure must have made 12 consecutive, full, on-time payments in the last 5 years; paid for at least $10,000 in improvements to the property in the past 18 months; and installed utility taps to physically connect their property to water, sewer or gas mains.
Colony Ridge accounted for more than 92% of all foreclosures recorded in Liberty County between 2017 and 2022. The company initiated foreclosures on at least 30% of all its seller-financed lots within three years of the consumer's purchase date, according to the lawsuit.
Colony Ridge was accused in 2023 of failing to assess customers' ability to repay the loans the seller-financed land purchases. The company allegedly did not request proof of borrowers' income, according to the complaint.
The settlement resolves allegations of predatory financing, and deceptive sales and marketing practices, for conduct that violated the Equal Credit Opportunity Act and the Fair Housing Act.
"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," Dhillon said in
Among the other requirements, Colony Ridge must have a written foreclosure policy "to meaningfully reduce the number and frequency of foreclosures and deeds in lieu of foreclosures." The company is prohibited from foreclosing on any borrower without first completing a good-faith evaluation of the borrower for relief under a default avoidance plan.
The company also must hire a compliance specialist to ensure truthful advertising, provide clear pre-sale disclosures about property conditions and costs, and ensure compliance with all county permitting and construction requirements. It also must create underwriting standards that, at a minimum, consider a borrowers' income, assets, and debt, and ability to repay the loan. Finally, Colony Ridge also must address harm to borrowers' credit caused by negative credit reports.
In addition to the funding of law enforcement, the company also must for gear.
Colony Ridge will "purchase law enforcement equipment, gear, and vehicles for items and services associated with the property owners of Colony Ridge" and provide "additional delegated immigration enforcement authority from the federal government to the Liberty County Sheriff's Office and Liberty County Constable offices," the agreement states.
One of the original allegations was that Colony Ridge provided mortgage applications and disclosures only in English, despite many of the borrowers' limited proficiency.
