Fair Lending Settlement Aids Law Enforcement Over Consumers (1)

A settlement between the US Justice Department and a Texas land developer for allegedly luring and deceiving Hispanic borrowers includes $20 million for law enforcement and to support the Trump administration’s immigration crackdown, with no relief for harmed consumers.

Colony Ridge Development LLC agreed to spend that amount on activities such as building a Texas Department of Public Safety or Liberty County Constable substation in a Houston subdivision, funding at least two additional police offers to patrol the subdivision, and purchasing gear for law enforcement officers under the unusual settlement filed Tuesday in the US District Court for the Southern District of Texas.

The developer also agreed to spend $48 million to upgrade flood prevention and drainage systems and for other infrastructure improvements.

Potential homebuyers will have to present Colony Ridge with a valid Texas driver’s license or identification card or an unexpired passport or visa, extending the Trump administration’s immigration clampdown to the homebuying process.

The company avoided paying any redress to consumers under the deal. The Biden administration’s Justice Department and Consumer Financial Protection Bureau had sought those payments in their 2023 complaint alleging Colony Ridge’s misleading advertising about infrastructure in its developments led to foreclosures among Hispanic borrowers when they paid to set up their services.

The CFPB voluntarily dismissed its claims against Colony Ridge on Tuesday. The agency under Trump-appointed leadership has largely dialed back its fair lending efforts and is withdrawing Biden-era guidance on protections for noncitizen borrowers.

“This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration,” Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division said in a statement.

The Texas attorney general’s office was also involved in the settlement.

Colony Ridge allowed “illegal aliens to run rampant on its streets, in its schools, and in its community,” Texas Attorney General Ken Paxton (R) said in a statement. “Now, it’s time for those responsible to pay a steep cost for their unlawful actions,”

The DOJ declined further comment on the case. The CFPB and representatives for Colony Ridge didn’t immediately respond to requests for comment.

Infrastructure Claims

The Biden administration’s complaint against Colony Ridge alleged the company engaged in predatory lending activities, such as aggressive Spanish-language marketing on TikTok and other social media platforms.

The New Caney, Texas-based company advertised that the Terrenos Houston subdivision came equipped with water, sewage, and electricity hookups already in place where borrowers would build homes.

Those services weren’t in place, however, and borrowers had to pay to set them up, the complaint said.

That made the properties unaffordable for many borrowers, who were trapped into mortgages with rates as high as 13% when prevailing rates averaged 2% to 4%, the complaint said.

Colony Ridge commenced foreclosure proceedings on around 30% of homes financed from September 2019 to September 2022, the Biden administration’s complaint said.

The Tuesday settlement requires Colony Ridge to make improvements to its foreclosure-prevention offerings and its efforts to assess potential borrowers’ ability to repay their loans.

Stone Hilton PLLC and Hilder & Associates PC represent Colony Ridge.

The case is CFPB v. Colony Ridge Development LLC, S.D. Tex., No. 4:23-cv-04729, Joint Motion for Settlement 2/10/26