Federal Lawsuit Alleges Texas’ Colony Ridge Developers Preyed on Hispanic Borrowers, Exploited Language Barriers

The U.S. Department of Justice seal on the stage at the U.S. Department of Justice in Washington, on Dec. 5, 2019. Samuel Corum/Getty Images

The U.S. Department of Justice and the Consumer Financial Protection Bureau (CFPB) are suing the developers of the Colony Ridge community in Texas, an alleged haven for illegal immigrants, accusing those developers of using predatory tactics to attract home buyers.

Colony Ridge, also known as the Terrenos Houston community, is a 33,000-acre unincorporated residential area in Liberty County, about 40 miles northeast of Houston. The community has been in active development since at least 2011.

On Wednesday, the DOJ and CFPB announced a lawsuit alleging the Colony Ridge Development company and various affiliated entities used an array of deceptive tactics to lure in predominantly Hispanic residents, getting them to accept loans they often cannot afford.

“Roughly one-in-four Colony Ridge loans ends in foreclosure, after which the company repurchases the properties and sells them to new borrowers,” the DOJ said in a press release.

The complaint alleges the developers often preyed on their predominantly Hispanic borrowers by conducting much of their advertising in Spanish while offering important transaction documents only in English.

As a result, federal prosecutors allege the Colony Ridge developers often lured prospective borrowers into homes in flood-prone areas, and provided borrowers with confusing information about the water, sewer, and electrical infrastructure on the development’s lots.

The lawsuit states borrowers were often led to believe that the development’s high-interest seller-financed mortgage options were the only way they could finance a home purchase in the development.

The Colony Ridge property sales assessors offered borrowers loans with fixed interest rates as high as 12.9 percent, according to the complaint. By comparison, a standard 20-year fixed-rate loan averaged between 2.35 and 4.05 percent interest between 2017 and 2021.

“Colony Ridge promised the American dream, but we allege that in reality, it has delivered a nightmare for thousands of hardworking Hispanic families who hoped to build their homes in the Terrenos Houston community,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division.

“This lawsuit demonstrates our commitment to holding accountable those in the housing and financial industry who intentionally target and exploit homebuyers because they are Hispanic or don’t speak English well.”

CFPB Director Rohit Chopra characterized the Colony Ridge development and accompanying sales tactics as a “set-up-to-fail scheme that has led thousands of families to lose their dreams of homeownership.”

Colony Ridge CEO John Harris pushed back on the allegations in a press statement shared with NTD News on Wednesday afternoon.

“We were blindsided by this lawsuit and we are concerned that the Justice Department would pursue this action. The lawsuit is baseless and both outrageous and inflammatory. Our business thrives off customer referrals because landowners are happy and able to experience the American Dream of owning property. 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. We look forward to telling the true story of Colony Ridge.”

Community Suspected of Harboring Illegal Immigrants

In the months preceding this federal lawsuit, the Colony Ridge community had caught media attention over allegations that it is providing a safe haven for illegal immigrants and cartel violence.

A May 1 article published by the Center for Immigration Studies (CIS), a think tank seeking to reduce immigration levels in the United States, claims a “significant portion” of residents in the Colony Ridge development are illegally present and that the Gulf and Sinaloa Cartels are active in the community.

The CIS article goes on to link the Colony Ridge development to an April 2023 shooting in which a Mexican national and multiple-times deported illegal immigrant is accused of killing five people in San Jacinto County, which neighbors Liberty County.

In October, Republican Texas State Reps. Steve Toth, Nate Schatzline, Brian Harrison, and Tony Tinderholt sent a letter to Republican Texas Gov. Greg Abbott and Republican Lt. Gov. Dan Patrick, calling for them to investigate the allegations of illegality within the Colony Ridge community and to place Liberty County into a state conservatorship “if facts warrant it.”

Trey Harris, Colony Ridge developer and brother of John, has disputed allegations the community has become a haven for illegal immigration and cartel activity.

In October, Mr. Harris told Houston Public Media that the “vast majority” of people who purchase land in Colony Ridge do so using Texas or U.S. identification, though he acknowledged the company does sell to non-citizens.

“It does bother me that people accuse my customers of being drug dealers and cartel and organized crime. Come on man,” Mr. Harris also told the Associated Press in October.

“These are families that want a better place to raise their kids. They want better schools for their kids. They want better opportunities for their children.”

According to the Associated Press, some residents in Liberty County acknowledged that undocumented citizens live in the Colony Ridge community but insisted this characterization does not describe most residents in the community.

NTD News asked federal prosecutors whether they'd seen evidence corroborating allegations that the Colony Ridge community is harboring illegal immigrants, but those prosecutors declined further comment and simply referred to their complaint. While federal prosecutors allege the Colony Ridge developers exploited language barriers to prey on a largely Hispanic clientele, the complaint makes no specific references to the allegations the community is harboring illegal immigrants or cartel members.

From NTD News