WASHINGTON— The Consumer Financial Protection Bureau (CFPB) and the Justice Department today have filed suit against Colony Ridge, a Texas-based developer and lender, for allegedly operating an illegal land sales scheme and targeting tens of thousands of Hispanic borrowers with “false statements and predatory loans.”
According to the government, the lawsuit, filed in federal district court alleges Colony Ridge sells unsuspecting families flood-prone land without water, sewer, or electrical infrastructure, and that the company “sets borrowers up to fail with loans they cannot afford.”
“Roughly 1-in-4 Colony Ridge loans ends in foreclosure, after which the company repurchases the properties and sells them to new borrowers,” the CFPB and Justice Department said.
The regulators are seeking redress for borrowers harmed by Colony Ridge and an immediate end to its illegal practices.
The CFPB said the action marks its first federal court lawsuit charging a defendant with violations of the Interstate Land Sales Full Disclosure Act.
The Defendants
The lawsuit names as defendants three Texas-based Colony Ridge affiliate companies, as well as Loan Originator Services, a nonbank mortgage company licensed to originate loans in Texas. Colony Ridge has developed more than 40,000 lots spread across an unincorporated area of Liberty County, Texas, approximately 30 miles northeast of Houston. Colony Ridge markets these subdivisions using the names “Terrenos Houston” and “Terrenos Santa Fe.”
“Colony Ridge targets Spanish-speaking borrowers: it advertises almost exclusively in Spanish, often in TikTok or other social media posts featuring, for example, national flags and regional music from Latin America,” the government stated. “In these advertisements, Colony Ridge promises consumers the dream of home ownership with its own seller financing: an easy-to-obtain loan product that requires no credit check and only a small deposit.”
Victims Lured In
The complaint alleges that Colony Ridge has lured tens of thousands of Hispanic consumers into their predatory loan products. Foreclosure and property deed records from September 2019 through September 2022 show that Colony Ridge initiated foreclosures on at least 30% of seller-financed lots within just three years of the purchase date, with most loan failures occurring even sooner.
Records also confirm that Colony Ridge accounted for more than 92% of all foreclosures recorded in Liberty County between 2017 and 2022, according to the government.
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