{"id":21154,"date":"2023-12-22T17:19:22","date_gmt":"2023-12-22T17:19:22","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=753187"},"modified":"2023-12-22T17:19:22","modified_gmt":"2023-12-22T17:19:22","slug":"feds-sue-houston-area-developer-for-predatory-lending","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2023\/12\/22\/feds-sue-houston-area-developer-for-predatory-lending\/","title":{"rendered":"Feds Sue Houston-Area Developer For Predatory Lending"},"content":{"rendered":"<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/southcentral\/2023\/12\/22\/753187.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/southcentral\/2023\/12\/22\/753187.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p>HOUSTON \u2014 Federal authorities on Wednesday sued Houston-area developer Colony Ridge, accusing it of luring Latino home buyers into seller-financed mortgages and setting them up to default and face foreclosure.<\/p>\n<p>\u201cColony Ridge set out to exploit something as old as America: An immigrant\u2019s dream of owning a home,\u201d said Alamdar S. Hamdani, the U.S. Attorney for the district that covers Houston. \u201cAs alleged in the complaint, Colony Ridge\u2019s exploitative practice began with misleading advertisements on platforms like TikTok and often ended with families facing economic ruin. No home \u2014 and shattered dreams.\u201d<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-topics=\"lawsuits\" data-revive-companies data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>Colony Ridge entities developed a collection of subdivisions that cover about 33,000 acres of land 30 miles north of Houston. Those neighborhoods drew the attention of Gov. Greg Abbott and the Republican-controlled Legislature after right-wing publications claimed they are a magnet for undocumented immigrants and overrun by crime.<\/p>\n<p>On Wednesday, federal authorities outlined the general workings of an alleged scheme that began with videos and ads in Spanish aimed at drawing Latino customers to visit Colony Ridge\u2019s properties \u2014 often featuring the national flags of Latin American countries and admission into contests for gifts like a free tractor. Once a person visited the property, the developer allegedly used high-pressure sales tactics, required minimal down payments and then extended loans without assessing a buyer\u2019s ability to repay or verifying their gross income.<\/p>\n<p>The company also misrepresented facts \u2014 such as guarantees of water, electricity and sewer hook-ups \u2014 \u201ccausing borrowers to incur substantial unanticipated expenses after closing,\u201d federal officials said.<\/p>\n<p>Once a buyer fell behind on payments, the company bought the land again and repeated the process \u2014 sometimes multiple times with the same piece of property. Roughly one-in-four Colony Ridge loans ends in foreclosure, according to federal officials.<\/p>\n<p>[Colony Ridge developer defends Houston-area community as state leaders vow action against it]<\/p>\n<p>In all, thousands of Latinos were victims of the scheme, the government alleged \u2014 and Colony Ridge violated four federal laws surrounding fair housing, credit opportunities and consumer protections. The government is seeking injunctive relief to stop Colony Ridge\u2019s practices, compensation for harmed consumers and penalties against the developer for the violations of federal laws.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-topics=\"lawsuits\" data-revive-companies data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>Asked at the news conference whether there was any criminal component, Assistant Attorney General Kristen Clarke said only that Wednesday\u2019s action was a civil action.<\/p>\n<p>The lawsuit arrived a week after the Houston Landing published an investigation about Colony Ridge\u2019s lending practices. Colony Ridge had reacquired 45% percent of the 35,000-plus properties it has sold since 2012, the investigation found by analyzing county records.<\/p>\n<p>Real estate experts told the Landing that Colony Ridge\u2019s behavior raised concerns of a predatory lending scheme.<\/p>\n<p>Colony Ridge\u2019s chief executive John Harris said Wednesday he was \u201cblindsided\u201d by the lawsuit, which he called \u201cbaseless and both outrageous and inflammatory.\u201d<\/p>\n<p>\u201cOur business thrives off customer referrals because landowners are happy and able to experience the American Dream of owning property,\u201d Harris said in a statement distributed by a spokesperson. \u201cWe loan to those who have no opportunity to get a loan from anyone else and we are proud of the relationship we have developed with customers. We look forward to telling the true story of Colony Ridge.\u201d<\/p>\n<p>After right-wing publications portrayed the area as blighted and dangerous \u201cmagnet for illegal immigrants,\u201d Abbott vowed to address \u201cserious concerns\u201d about Colony Ridge and added it to the agenda for a special legislative session called for education.<\/p>\n<p>Amid the attention from state officials, the developer, Harris, rejected allegations that the development is a \u201cmagnet for illegal immigrants.\u201d Harris said the company offered people an opportunity to achieve the American dream of owning a home.<\/p>\n<p>\u201cI know I\u2019ve got people slinging mud at me,\u201d Harris said in an October interview. \u201cBut to me that\u2019s insignificant compared to the love I get from my customers, right? The love I get from my customers means way more, affects me mentally and emotionally way more than the naysayers.\u201d<\/p>\n<p>After initially having no new policies to show for Abbott\u2019s request to address the development, lawmakers ultimately approved a bill that allows the state to spend up to $40 million for state troopers to patrol Colony Ridge.<\/p>\n<p>A spokesperson for Abbott, who this week signed the bill into law, did not respond to a request for comment about Wednesday\u2019s federal lawsuit. Neither did Sen. Joan Huffman, R-Houston, or Rep. Jacey Jetton, R-Richmond, who authored and sponsored the bill, respectively.<\/p>\n<p>State Sen. Robert Nichols, R-Jacksonville, who represents Liberty County, also did not immediately respond to a request for comment.<\/p>\n<p>Domingo Garcia, national president of The League of United Latin American Citizens, said the advocacy group has asked the Liberty County district attorney\u2019s office to launch a criminal investigation into Colony Ridge. Garcia, who learned about the company\u2019s lending practices after reading the Houston Landing investigation, said the organization supports the Department of Justice lawsuit.<\/p>\n<p>\u201cThe American dream has become the American nightmare for thousands of Hispanic immigrants who are being hit from various sides,\u201d Garcia said. \u201cYou have politicians like Abbott using them to try to win votes and then you have exploitative developers trying to take their money and steal their dreams by foreclosing on them.\u201d<\/p>\n<p>Federal investigators found that Colony Ridge accounted for 92% of foreclosures in Liberty County between 2017 and 2022. Looking at three years preceding September 2022, investigators found that the developer had initiated foreclosure in at least 30% of seller-financed lots.<\/p>\n<p>During the foreclosure proceedings, Colony Ridge would buy the property for the outstanding loan price \u2014 and with any improvements that a customer had already paid for and completed.<\/p>\n<p>\u201cIn other words, Colony Ridge reimburses itself for the defaulted amount and pockets the value of any such improvements,\u201d government officials wrote in the lawsuit.<\/p>\n<p>They then allegedly flipped the property \u2014 for more money. In one example highlighted in the lawsuit, Colony Ridge sold a property in May 2020 to the first buyer for $29,580 and, after two foreclosures, to a third buyer for $64,050 in August 2021. Almost a year later, the developer foreclosed on the third buyer.<\/p>\n<p>Foreclosure and property deed records reviewed by investigators showed that Colony Ridge flipped at least 40% of all properties it had sold between September 2019 and June 2023; 2,067 of those properties were sold four or more times, according to the lawsuit.<\/p>\n<p>Federal officials plan to launch a public awareness campaign and will be on the ground in Liberty County to connect with people who have been affected, according to Clark, the assistant attorney general. They also opened a hotline and email to receive tips and accounts of people\u2019s experiences with the developer.<\/p>\n<p>Pooja Salhotra contributed to this story.<\/p>\n<p>This article originally appeared in The Texas Tribune at https:\/\/www.texastribune.org\/2023\/12\/20\/colony-ridge-texas-federal-lawsuit-predatory-lending\/.<\/p>\n<p>The Texas Tribune is a member-supported, nonpartisan newsroom informing and engaging Texans on state politics and policy. Learn more at texastribune.org.<\/p>\n<p class=\"tagtag\"> <span class=\"tagtag\">Topics<\/span> <a href=\"https:\/\/www.insurancejournal.com\/lawsuits\/\" class=\"btn btn-sm btn-primary tagtag\">Lawsuits<\/a> <\/p>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"753187\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! Please tell us what we can do to improve this article.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-yes\">\n<form class=\"feedback-form\">\n<p>Thank you! <span class=\"percent\"><\/span>% of people found this article valuable. Please tell us what you liked about it.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-more-articles\">\n<p class=\"thank-you-text\">Here are more articles you may enjoy.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"subscribe-banner subscribe-banner-in-content-2\">\n<div class=\"content\">\n<h4>Interested in <em>Lawsuits<\/em>?<\/h4>\n<p>Get automatic alerts for this topic.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Article 0 Comments HOUSTON \u2014 Federal authorities on Wednesday sued Houston-area developer Colony Ridge, accusing it of luring Latino home buyers into seller-financed mortgages and setting them up to default and face foreclosure. \u201cColony&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[478,1,479,77],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21154"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=21154"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21154\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=21154"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=21154"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=21154"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}