The owners of Colony Ridge, a Houston-area developer accused of running a predatory lending scheme that defrauded Latinos, agreed to a sweeping legal settlement that would require them to invest in law enforcement and infrastructure at their properties and toughen sales practices to address a range of allegations by Texas GOP media leaders and conservative media leaders.
Chief among the allegations was that Colony Ridge developers sold land to undocumented people, creating a crime-ridden complex about 30 miles outside of Houston that was allegedly run by Mexican drug cartels.
Developers deny that their communities are unsafe, a contention borne out by testimony from local officials when the Legislature held a special hearing in 2023 in response to residents’ outrage and accounts of the development. Texas Attorney General Ken Paxton sued the developers soon after, accusing them of deceptive sales, marketing and lending practices in a lawsuit that echoes claims filed by the federal government in a separate case.
Under the settlement released Tuesday, Colony Ridge’s owners agreed to waive the documents required of buyers. Buyers must now present a Texas ID or driver’s license — which undocumented immigrants cannot obtain in Texas — or a passport or visa. The agreement did not specify that the passport must be American.
The agreement resolves state and federal lawsuits, which alleged that Colony Ridge’s owners lured Spanish-speaking homebuyers into seller-financed mortgages with high interest rates they could not afford. About one in four Colony Ridge loans resulted in foreclosure, federal officials estimate. The company would then flip those properties to new unsuspecting customers looking to become homeowners, court filings allege.
A federal lawsuit filed by the Biden administration’s Justice Department in late 2023 also accused Colony Ridge of misrepresenting facts such as warranties for water, electric and sewer hookups and whether properties had previously flooded.
The settlement seeks to address these allegations. Colony Ridge agreed:
Stop seeking approval for any new residential plot for three years.
• Establish new criteria for approving loans and offer relief to consumers facing foreclosure.
Make sure its advertising and marketing is truthful.
• Spend $48 million on infrastructure projects such as roads and drainage systems.
• Offer discounts to peace officers in an effort to encourage them to stay in development.
• Set aside $20 million for law enforcement, including money to build a new police station within the community and specifically for immigration enforcement.
Colony Ridge Chief Executive Officer John Harris said he was pleased to reach an agreement and move forward.
“This settlement allows us to continue to invest in our neighborhoods and support the thousands of families who have trusted us to provide them with a place to call home,” Harris said in a statement. “We are pleased that the funds from this agreement will be channeled back into the community to benefit residents.”
In a statement, Paxton said the settlement resulted in Colony Ridge’s owners “paying a heavy price for their illegal actions.”
“My office will continue to bring the full force of the law to bear against anyone who threatens the safety of our state or creates a safe harbor for illegals,” Paxton said.
Hermit K. Dhillon, who oversees the Justice Department’s civil rights division, celebrated the settlement in a statement as a victory against discrimination and a crackdown on illegal immigration.
“Deliberately targeting vulnerable borrowers with the American dream of home ownership and then ensnaring them in a predatory scheme is not only wrong, it also violates our civil rights laws,” Dhillon said. “The DOJ will go after all lenders, financiers, and land developers who participate in schemes that ultimately encourage illegal immigration.”
The deal appeared to please immigration hardliners and those who had been advocating on behalf of residents for years, before it became a conservative lightning rod raising alarm bells about the development.
Lt. Gov. Dan Patrick thanked Paxton in a social media post and claimed to be “the first elected official to conduct an in-depth tour of Colony Ridge with law enforcement.”
“What I saw was shocking. A community that looked like an illegal immigrant town about 35 miles from Houston,” Patrick said, adding, “We can’t allow these towns to spread across Texas.”
Michael Quinn Sullivan, publisher of the right-wing Texas Scorecard, which helped draw conservative attention, said the settlement “actively means that Colony Ridge is no longer a safe haven for illegal aliens.” He called it a “huge win on a big issue” for Paxton — currently in a heated GOP primary for the U.S. Senate — and Dillon.
SuEllen Sanchez, who with her sister filed complaints about Colony Ridge with state agencies years ago, sounded an optimistic tone in a social media post.
“They will no longer be able to deceive immigrants,” Sanchez said. “My heart goes out to them right now.”
This article first appeared on The Texas Tribune.
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