Justice Dept. Accuses Real Estate Developers of Taking Advantage of Immigrants
HOUSTON — The Justice Department on Wednesday sued real estate developers behind a large housing complex outside of Houston the government has accused of taking advantage of immigrants.
Colony Ridge promises the buyers secure housing but the Justice Department says it is commonly flooded with sewage, often not connected to utilities and subject to predatory loans.
Many of the homebuyers are illegal immigrants who lack Social Security numbers, good employment records and have few options for other housing, according to the lawsuit filed in federal court in Houston.
The company is accused of advertising in Spanish-language ads but only later adding disclosure documents in English saying the homes are not hooked up to utilities. Many of the buyers lack English-speaking skills.
Colony Ridge — also known as Terrenos Houston or Terrenos Santa Fe— has grown quickly, largely as a result of immigration problems along the southern border and its promises of easy credit and low deposits. It spans more than 33,000 acres, nearly the same size as Washington, D.C.
From about 20,000 residents in 2020, it has grown to about 50,000 this year. Many of them can expect to lose their homes.
Foreclosure and property deed records from September 2019 through September 2022 show Colony Ridge foreclosed on at least 30% of the homes it financed within three years of the purchase date. Most of the foreclosures came sooner.
The records show Colony Ridge accounted for more than 92% of foreclosures in Liberty County between 2017 and 2022.
“Unlike responsible lenders who conduct a careful determination about whether an applicant can repay a loan, Colony Ridge does not verify income or any ability to pay, knowing that it stands to benefit if the borrower defaults on the loan,” said U.S. Assistant Attorney General Kristen Clarke during a press conference.
The Justice Department was joined in complaints about Colony Ridge by the Consumer Financial Protection Bureau and local police in Texas.
“The CFPB and Justice Department lawsuit in federal court charges Colony Ridge with a slew of illegal misconduct and seeks to stop this set-up-to-fail scheme that has led thousands of families to lose their dreams of homeownership,” said CFPB Director Rohit Chopra in a statement.
As the number of residents grows, the housing complex has increasingly become a center of methamphetamine production as well as overdoses, thefts and burglaries, police said.
Texas Gov. Greg Abbott signed legislation Monday with billions of dollars set aside for border security. As much as $40 million is directed to more law enforcement at the Colony Ridge developments.
Colony Ridge officials said allegations of their abuses were ill-founded and out of context.
Rapid growth of the Colony Ridge developments has meant it is a project under development, which explains why utilities have not yet been connected for some of the homes, they said.
Colony Ridge Chief Executive Officer John Harris said he was surprised by the lawsuit.
“The lawsuit is baseless and both outrageous and inflammatory,” Harris said in a statement. “Our business thrives on customer referrals because landowners are happy and able to experience the American dream of owning property.”
He denied his company’s loans were predatory, saying, “We 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.”
The lawsuit represents the first time the Justice Department has invoked authority under the Fair Housing Act to sue for predatory mortgage lending practices.
The Justice Department is asking the U.S. District Court for the Southern District of Texas for an injunction against Colony Ridge’s practices that violate Fair Housing Act standards, repayment to customers who have been harmed and payment of a fine to the CFPB.
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