Colony Ridge – $68M Settlement with DOJ

COLONY RIDGE, TX – In a $68 million settlement announced by the U.S. Department of Justice, Colony Ridge Land LLC and its affiliated entities agreed to resolve allegations that the developer engaged in predatory land sales and lending practices targeting Hispanic borrowers. The agreement, reached in coordination with Texas Attorney General Ken Paxton’s office, concludes litigation initiated in late 2023 and expanded through early 2024.

According to the DOJ’s Civil Rights Division, the lawsuit accused Colony Ridge of violating the Equal Credit Opportunity Act and the Fair Housing Act through marketing and lending tactics that allegedly steered vulnerable buyers into high risk seller financed loans without verifying their ability to repay. Investigators said the result was a pattern of defaults, foreclosures, and financial distress across the rapidly expanding Liberty County development.

Assistant Attorney General Harmeet K. Dhillon stated the government viewed the conduct as both unlawful and socially harmful, asserting that deceptive lending schemes undermine civil rights protections while destabilizing communities. Dhillon also noted enforcement efforts would extend to lenders and developers whose practices may contribute to illegal immigration or unsafe housing conditions.

The settlement resolves a December 2023 federal lawsuit filed jointly by the Justice Department and the Consumer Financial Protection Bureau, alongside a March 2024 lawsuit brought by the Texas Attorney General’s Office.

Under the terms of the agreement, Colony Ridge must allocate $48 million toward infrastructure upgrades, including $18 million dedicated to drainage improvements intended to mitigate flooding risks that residents and investigators say have caused costly property damage. An additional $30 million will fund broader infrastructure enhancements throughout the development.

The developer also agreed to adopt underwriting standards requiring verification of borrower income, assets, and debt levels before issuing loans, a shift designed to reduce default risk. The settlement further mandates foreclosure mitigation policies, borrower assistance programs, and a credit remediation plan addressing past reporting tied to defaulted loans.

Investigators also cited concerns involving marketing practices. As part of the settlement, Colony Ridge must ensure advertising accurately represents property conditions, utility access, and loan terms. Pre sale disclosures must now clearly indicate whether homes are move in ready and whether essential services are immediately available.

A legal settlement involving the State of Texas, the federal government, and Colony Ridge will also require prospective buyers to verify lawful presence in the United States. According to reporting from Yahoo News, purchasers must present a valid Texas-issued identification card or driver’s license, or appropriate immigration documentation such as a passport accompanied by a current visa, before completing certain transactions.

Another significant provision includes a $20 million commitment aimed at strengthening law enforcement presence within the development. The agreement requires Colony Ridge to coordinate with local, state, and federal authorities to enhance public safety efforts as the community continues to grow.

Additionally, the settlement imposes documentation requirements tied to federal land sales exemptions and halts new residential plats for direct to consumer sales for three years, effectively slowing the rapid expansion that drew national scrutiny.

Colony Ridge has not admitted wrongdoing as part of the settlement, a common feature in civil resolutions. The company has previously stated that it provides affordable homeownership opportunities to buyers who may struggle to access traditional financing, while emphasizing its cooperation with regulators.

The development has been the subject of intense political and media attention due to its size, unconventional financing model, infrastructure concerns, and questions surrounding population growth patterns in the region.

Sources: U.S. Department of Justice Civil Rights Division announcement, Justice.gov; Texas Office of the Attorney General filings; Consumer Financial Protection Bureau case records.