Texas-based land developer and lender Colony Ridge Land LLC has agreed to pay $68 million to settle allegations of predatory practices against Hispanic borrowers. A portion of the funds will be used to support immigration-related law enforcement.

The case dates back to December 2023, when the U.S. Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) sued the company. The plaintiffs accused Colony Ridge of operating an illegal land sales scheme and making false statements to tens of thousands of Hispanic borrowers in Texas, in violation of the Fair Housing Act and the Equal Credit Opportunity Act. The Texas Office of the Attorney General (OAG) filed a similar lawsuit in 2024.

In the settlement, Colony Ridge “expressly deny any wrongdoing as alleged by the United States or the State of Texas in the Complaints or that could have been alleged.”

In a statement to HousingWire, Colony Ridge’s CEO John Harris said he was happy “to resolve these lawsuits and move forward serving our growing community.”

“The settlement allows us to continue investing in our neighborhoods and supporting the thousands of families who have trusted us to provide a place for them to call home. We’re glad that funds from this agreement will be directed back into the community to benefit residents.”

Federal agencies said Colony Ridge used misleading sales tactics, including misrepresentations about flooding risks, and failed to verify borrowers’ ability to repay, which contributed to high foreclosure rates.

The settlement reached with the DOJ, CFPB and Texas OAG marks the DOJ’s first predatory mortgage lending case and the CFPB’s first federal court lawsuit involving the Interstate Land Sales Full Disclosure Act (ILSA).

Under the agreement, Colony Ridge is expected to invest $48 million in infrastructure improvements, including $18 million for drainage to mitigate flood damage. The company must also adopt underwriting standards that assess borrowers’ ability to repay and implement policies aimed at reducing foreclosures.

An additional $20 million will be used to increase law enforcement presence in the developments and ensure compliance with local, state and federal requirements, according to the settlement.

The company is also required to use ILSA’s intrastate land sales exemption and require purchasers to present valid identification, such as a Texas-issued driver’s license or ID card; a limited-term Texas driver’s license issued after Jan. 1, 2025; or an unexpired passport with a valid visa issued or renewed after that date.

“The changes required by this settlement will promote public safety, and affordable and sustainable homeownership in America, key priorities of this Administration,” Harmeet K. Dhillon, assistant attorney general of the DOJ’s Civil Rights Division, said in a statement.

Update: This story was updated with a statement from Colony Ridge.

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