DOJ charges Texas developer with predatory lending
The U.S. Department of Justice and the Consumer Financial Protection Bureau sued Texas real estate developer Colony Ridge Development LLC on Wednesday, claiming the company uses discriminatory lending practices, misleads customers, and offers predatory loans. U.S. Assistant Attorney General Kristen Clarke described the business as a “one-stop shop for discriminatory lending,” marking the first predatory mortgage lending case brought by the DOJ under the Fair Housing Act and Equal Credit Opportunity Act. Colony Ridge called the lawsuit “baseless” in a statement. Their website also notes they are not legally required to follow federal “ability to repay” laws when offering lot loans.
How exactly did the company discriminate? Colony Ridge allegedly targeted tens of thousands of Hispanic customers with false advertising and had customers agree to seller-financed loans with exorbitant interest rates by exploiting language barriers. The company then allegedly gave customers plots without the promised utilities (water, electricity, etc.) or in areas prone to flooding, making buyers likely to default on their loans or suffer foreclosure. Clarke described the practice as cyclical, with Colony Ridge reportedly “reselling [lots] at even higher prices to new, unsuspecting borrowers.”
Dig deeper: Read Todd Vician’s report from WORLD Magazine on a recent verdict involving real estate commissions.
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