Colony Ridge To Halt Land Development, Avoid Foreclosures In $68M DOJ Settlement
The developers of Colony Ridge, a community north of Houston, reached a $68M settlement in a lawsuit by the U.S. Department of Justice after being accused of running a one-stop shop for discriminatory lending.
The DOJ sued Colony Ridge Development LLC in late 2023, marking the department’s first predatory mortgage lending case. The developers and lenders were accused of misleading tens of thousands of mainly Spanish-speaking borrowers into taking out loans they could not afford to buy flood-prone properties, then profiting from their foreclosures.
As part of the settlement with the DOJ and the Texas Office of the Attorney General, Colony Ridge and its affiliates agreed to invest $48M in infrastructure improvements, including $18M for drainage infrastructure to address severe flood damage to homes, according to a press release.
The developers also agreed to halt development of new residential plats for direct-to-consumer sales for three years and require land purchasers to present recently issued state identification, passports or visas.
The 34,000-acre development began gaining significant attention around September 2023, when conservative media and politicians called the development a “magnet for illegal immigrants” and claimed the streets were overrun by crime, The Texas Tribune reported. Texas Gov. Greg Abbott suggested the subdivisions were a “no-go zone” for law enforcement.
The settlement agreement requires Colony Ridge to invest $20M in an increased law enforcement presence and to accurately represent the state of properties in advertisements and presale disclosures.
Residents had long alleged “deceptive practices” at the development, saying they were lied to about utility hookups and flooding at their properties. The DOJ said this would force residents to spend more money to make the properties livable.
Colony Ridge would wait until borrowers defaulted, then foreclose on the properties, purchase them back for pennies on the dollar and resell them, according to the DOJ. At the time of the DOJ lawsuit, Colony Ridge CEO John Harris told Bisnow the suit was “baseless and both outrageous and inflammatory.”
Texas Attorney General Ken Paxton brought a similar lawsuit to the DOJ in March 2024, calling the business model a “foreclosure mill.”
The settlement requires Colony Ridge to adopt underwriting standards that assess borrowers’ ability to pay, develop a policy to meaningfully reduce the number and frequency of foreclosures, and develop a plan to help borrowers avoid defaulting.
In a statement sent to Bisnow, Harris said he is happy to resolve these lawsuits and “move forward serving our growing community.”
“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,” the statement continued.
Harris said they are glad the funds from this agreement will be directed back into the community to benefit residents.
“This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration,” DOJ Civil Rights Division Assistant Attorney General Harmeet Dhillon said in the release.
“The changes required by this settlement will promote public safety, and affordable and sustainable homeownership in America, key priorities of this Administration.”
UPDATE, FEB. 12, 7:56 A.M. CT: This article has been updated to add a new statement from Colony Ridge CEO John Harris.
