Federal authorities on Wednesday sued Houston-area developer Colony Ridge, accusing it of luring Latino home buyers into seller-financed mortgages and setting them up to default and face foreclosure.

“Colony Ridge set out to exploit something as old as America: An immigrant’s dream of owning a home,” said Alamdar S. Hamdani, the U.S. Attorney for the district that covers Houston. “As alleged in the complaint, Colony Ridge’s exploitative practice began with misleading advertisements on platforms like TikTok and often ended with families facing economic ruin. No home — and shattered dreams.”

Colony Ridge entities developed a collection of subdivisions that cover about 33,000 acres of land 30 miles north of Houston. Those neighborhoods drew the attention of Gov. Greg Abbott and the Republican-controlled Legislature after right-wing publications claimed they are a magnet for undocumented immigrants and overrun by crime.

Colony Ridge used Spanish videos to target prospective Latino buyers, federal authorities alleged Wednesday. Once a person visited the property, the developer allegedly used high-pressure sales tactics, required minimal down payments and extended loans without assessing a buyer’s ability to repay or verifying their gross income.

The company also misrepresented facts — such as guarantees of water, electricity and sewer hook-ups — “causing borrowers to incur substantial unanticipated expenses after closing”, federal officials said. Once a buyer fell behind on payments, the company bought the land again and repeated the process — sometimes multiple times with the same piece of property, federal authorities described at a Wednesday news conference.

The lawsuit arrived a week after the Houston Landing published an investigation about Colony Ridge’s lending practices. Colony Ridge had reacquired 45% percent of the 35,000-plus properties it has sold since 2012, the investigation found by analyzing county records..

Real estate experts told the Landing that Colony Ridge’s behavior raised concerns of a predatory lending scheme.

Colony Ridge’s chief executive John Harris said Wednesday he was “blindsided” by the lawsuit, which he called “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,” Harris said in a statement distributed by a spokesman. “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.”

After right-wing publications portrayed the area as blighted and dangerous “magnet for illegal immigrants,” Abbott vowed to address “serious concerns” about Colony Ridge and added it to the agenda for a special legislative session called for education.

Amid the attention from state officials, the developer, Harris, rejected allegations that the development is a “magnet for illegal immigrants” whose streets are overrun by crime. Harris said the company offered people an opportunity to achieve the American dream of owning a home.

“I know I’ve got people slinging mud at me,” Harris said in an October interview. “But to me that’s insignificant compared to the love I get from my customers, right? The love I get from my customers means way more, affects me mentally and emotionally way more than the naysayers.”

After initially having no new policies to show for Abbott’s request to address the development, lawmakers ultimately approved a bill that allows the state to spend up to $40 million for state troopers to patrol Colony Ridge.

A spokesperson for Abbott, who this week signed the bill into law, did not immediately respond to a request for comment about Wednesday’s federal lawsuit. Neither did Sen. Joan Huffman, R-Houston, or Rep. Jacey Jetton, R-Richmond, who both authored and sponsored the bill, respectively.

State Sen. Robert Nichols, R-Jacksonville, who represents Liberty County, also did not immediately respond to a request for comment.

This article was written by ALEJANDRO SERRANO AND POOJA SALHOTRA of The Texas Tribune.  This article originally appeared at : https://www.texastribune.org/2023/12/20/colony-ridge-texas-federal-lawsuit-predatory-lending/