WASHINGTON (NEXSTAR) — The U.S. Justice Department announced Wednesday its first predatory mortgage lending case.
In conjunction with the Consumer Financial Protection Bureau (CFPB), officials are suing Texas-based housing developer Colony Ridge for targeting thousands of Hispanic borrowers with false statements and predatory loans.
“It often ended with families facing economic ruin,” said U.S. Attorney Alamdar Hamdani for the Southern District of Texas. “No home and shattered dreams.”
“What we uncovered was disturbing,” said Rohit Chopra, the CFPB director.
“Colony Ridge operates as a one-stop shop for discriminatory lending,” said Assistant Attorney General Kristen Clarke.
The lawsuit accuses the developer and lender of baiting the Hispanic community on TikTok, exploiting language barriers and locking families into unaffordable loans for flood-prone land that does not include infrastructure for utilities.
“The impact of this unlawful, discriminatory and fraudulent scheme is devastating,” Clarke said.
Clarke said about one in three Colony Ridge loans fail within three years, which is more than 10 times the national rate.
“That equates to thousands of Hispanic borrowers who lost their homes because of this scam,” she said.
Clarke said Colony Ridge then buys back the properties for pennies on the dollar.
“And then reselling them at even higher prices to new unsuspecting borrowers,” she said.
During Wednesday’s announcement, these officials said the civil action aims to compensate current and former homeowners and to protect future homeowners from unfair lending practices.
Clarke said federal officials will be on the ground to assist residents.
“Today, that public campaign begins aggressively,” she said. “If you are somebody who lives in this community or has lived in this community who believes you’ve been impacted by this fraud, we want to hear from you.”
Earlier this year, the state of Texas also launched an investigation into Colony Ridge. At that time, the CEO defended his company, saying during a hearing at the state capitol that it provides an affordable option for low-income Texans.
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