Federal government sues Colony Ridge developer near Houston 

A housing development thrown into the spin cycle of right-wing media conspiracies related to immigration earlier this year stands accused of targeting Hispanic homebuyers in an illegal land-selling scheme.

The U.S. Justice Department and Consumer Financial Protection Bureau sued Colony Ridge, alleging the Houston-area developer has deceived tens of thousands Hispanic borrowers with false statements and predatory loans, according to the U.S. Attorney’s Office.

The lawsuit claims that the Liberty County development, located about 30 miles northeast of Houston, sells prospective homeowners flood-prone land without water, sewer or electrical infrastructure. Colony Ridge allegedly took advantage of prospective Hispanic buyers by conducting its marketing in Spanish, while providing important transaction documents only in English, said Attorney General Merrick Garland.

Colony Ridge has been accused of baiting borrowers into loans they can’t afford, ultimately leading them to financial ruin. Approximately one in four loans issued by Colony Ridge ends in foreclosure, according to a release from the Justice Department. The developer later reacquires these properties and sells them to new borrowers, the lawsuit says.

“Using 21st century social-media applications to target and mislead consumers, Colony Ridge set out to exploit something as old as America — an immigrant’s dream of owning a home,” said U.S. Attorney Alamdar Hamdani for the Southern District of Texas. “As alleged in the complaint, Colony Ridge’s exploitative practice began with misleading advertising on platforms like TikTok and often ended with families facing economic ruin, no home, and shattered dreams.”

The lawsuit identifies three Colony Ridge affiliate companies and Loan Originator Services as defendants. Colony Ridge has developed over 40,000 lots in an unincorporated area of Liberty County, marketing these subdivisons under names like “Terrenos Houston” and “Terrenos Santa Fe.”

The company purportedly misled borrowers by asserting that lots in Terrenos Houston came equipped with city services, including water, sewer and electricity. These claims were often disseminated through platforms like TikTok, with videos showcasing promises like “Terrenos Houston has all city services for each lot”. However, after submitting non-refundable deposits, borrowers discovered the stark reality: many properties lacked these fundamental services, according to the suit.

Furthermore, Colony Ridge stands accused of downplaying significant environmental risks. The complaint details instances in which the company either failed to disclose or outright denied flood risks associated with its properties. In some sections of Terrenos Houston, severe flooding led to raw sewage inundating properties, causing significant damage to personal belongings and endangering residents, the Justice Department alleges.

The lawsuit also sheds light on Colony Ridge’s supposedly predatory loan practices. The company allegedly leveraged high-pressure sales tactics, often targeting vulnerable Hispanic consumers with promises of easy financing. Yet, these loans charged excessive rates according to the suit, ranging from 10.9 percent to 12.9 percent between 2017 and 2021, far surpassing standard rates during the same period.

The Justice Department and CFPB aim to halt Colony Ridge’s illicit activities, provide restitution for affected consumers and impose civil penalties. 

Earlier this year, Colony Ridge emerged in right-wing media, painting it as a crime-infested hub of undocumented immigrants. Prominent figures like Congressman Ronny Jackson and Lieutenant Governor Dan Patrick expressed concerns, and Attorney General Ken Paxton even launched investigations into the development.

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