Colony Ridge's Bid to Dismiss DOJ Lawsuit Rejected by Federal Judge

A federal judge has rejected Colony Ridge's attempt to dismiss a lawsuit filed by the Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) against the massive Texas land development. The suit, which accuses Colony Ridge of engaging in predatory lending practices that targeted illegal immigrants and Hispanic buyers, will proceed in court despite the development’s motion to dismiss the case.

Judge Alfred Bennett ruled against Colony Ridge, located just north of Houston, Texas, denying their attempt to throw out the civil suit. The lawsuit alleges that the development exploited Hispanic buyers by advertising in Spanish but presenting critical loan documents in English. The predatory lending practices have been described as “reverse redlining,” in which the development intentionally targeted Hispanic buyers with unfavorable terms, ultimately pushing many into foreclosure.

The federal lawsuit marks the first of its kind, accusing a developer of reverse redlining to take advantage of vulnerable communities. Colony Ridge, operated by brothers John and William “Trey” Harris, has long marketed itself to illegal immigrants, using social media advertisements encouraging buyers to "own land in the United States" without checking creditworthiness. Loans offered by the development come with exorbitant interest rates of 12.9%, trapping buyers in an endless cycle of debt.

Judge Bennett stated that the allegations in the suit "easily satisfy the elements of a reverse redlining claim" under the Equal Credit Opportunity Act. This ruling opens the door for the DOJ and CFPB to move forward with their case, setting the stage for a landmark legal battle. However, the judge did dismiss a third-party company that created loan documents on behalf of Colony Ridge from the lawsuit.

Beyond the federal lawsuit, Colony Ridge is also grappling with a separate lawsuit filed by Texas Attorney General Ken Paxton. Paxton's suit accuses the development of deceptive trade practices, with Paxton suggesting that “literally every sale” could be fraudulent. Given the development’s estimated 50,000 to 75,000 residents, the financial penalties could be catastrophic, with each violation potentially carrying a $10,000 fine.

Colony Ridge’s legal troubles don't end there. The development is under investigation by the Environmental Protection Agency (EPA) for undisclosed violations, and other federal and state agencies, including the IRS, Army Corps of Engineers, and Texas Commission on Environmental Quality, are also probing the company’s operations.

As Colony Ridge continues to expand, its controversial practices are coming under intense scrutiny from multiple fronts. The development’s history of targeting illegal immigrants and manipulating language barriers to exploit Hispanic buyers is now at the center of a high-stakes legal fight that could have far-reaching implications.

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