Washington — A Texas-based housing developer and mortgage lender is accused of targeting members of the Houston area's Hispanic community by offering loans to people who could not pay them back, selling them land in disrepair and taking advantage of language barriers.
Prosecutors allege Colony Ridge Development, LLC, and its subsidiaries carried out a predatory lending scheme in which foreclosures were part of the business model, according to a federal lawsuit filed Wednesday.
Investigators say tens of thousands of potential buyers from the Hispanic community were lured into purchasing land from Colony Ridge with targeted Spanish-language ads on TikTok and other social media platforms. Some of the marketing falsely advertised that the land came with utility connectivity, the civil complaint said, when it did not, and other land that was sold was prone to flooding and raw sewage runoff.
Once buyers were interested in the land, prosecutors said Colony Ridge directed customers to loan plans they controlled.
According to court documents, Colony Ridge, a lending company based in Houston, has been accused of extending loans without properly assessing borrowers' ability to repay. Prosecutors claim that the company only requires self-reported gross income, which is not verified, and a small down payment. They allege that Colony Ridge and its lender did not determine whether borrowers were financially capable of securing and repaying a loan.
The lawsuit further claims that if borrowers were unable to keep up with loan payments, Colony Ridge foreclosed on the land and sold it to other customers for a profit. Assistant Attorney General Kristen Clarke stated that when borrowers lost their properties to foreclosure, Colony Ridge would repurchase them at a significantly lower price and resell them at higher prices to new unsuspecting borrowers. The Justice Department is seeking compensation for the victims of this alleged scheme.
Clarke described Colony Ridge as operating as a "one-stop shop for discriminatory lending." In response to the lawsuit, Colony Ridge CEO John Harris expressed surprise and concern, stating that the company was "blindsided" by the legal action taken by the Justice Department.
Harris dismissed the lawsuit as "baseless" and called it "outrageous and inflammatory." He defended the company's practices, claiming that Colony Ridge thrives on customer referrals and helps individuals who have no other options for obtaining a loan. Harris emphasized that the company takes pride in the relationships it has built with customers and their ability to achieve the American Dream of owning property.
Prosecutors and federal regulators have accused a lending company of engaging in a predatory lending scheme that violates federal law. According to court documents, the company has been warned about the allegations and members of the community have been informed.
