CFPB v. Colony Ridge
What’s at Stake
A coalition, led by the National Fair Housing Alliance (NFHA) and composed of nonprofit organizations focused on fair housing, civil rights, and immigration advocacy, today asked a federal court in Texas to refuse to enter the proposed settlement agreement in Consumer Financial Protection Bureau et al. v. Colony Ridge Development LLC, et al. because it contains terms that are unlawful, unnecessary, and unrelated to the underlying case.
Summary
The friend of the court brief — submitted today by NFHA, League of United Latin American Citizens, Center for Responsible Lending, the National Consumer Law Center, UnidosUS, the Poverty & Race Research Action Council, Public Justice, and Southern Poverty Law Center — challenges a proposed settlement agreement submitted by the U.S. Department of Justice (DOJ) in a case currently being heard in the U.S. District for the Southern District of Texas. The case alleges that Houston land developers and lenders (collectively, Colony Ridge) violated numerous laws, including the Equal Credit Opportunity Act, Fair Housing Act, Interstate Land Sales Full Disclosure Act, and Consumer Financial Protection Act of 2010 when it intentionally targeted Hispanic consumers with false statements and predatory loans that caused many to suffer foreclosure. Instead of providing restitution to the consumers targeted in the scam, however, the proposed settlement unlawfully funnels $20 million toward increased immigration enforcement in the communities where those consumers reside.
“[I]nstead of providing individual relief to the victims of Defendants’ predatory scheme, the settlement agreement appears intended to subject them to heightened surveillance, and, for some, could subject them to potential detention, family separation, or even deportation,” the brief states.
The Consumer Financial Protection Bureau (CFPB) and DOJ sued Colony Ridge in December 2023 for operating an illegal land sales scheme and targeting tens of thousands of Hispanic borrowers with false statements and predatory loans with interest rates of 10.9% to 12.9% — three to five times typical market rates. The lawsuit alleges Colony Ridge sold unsuspecting families flood-prone land without water, sewer, or electrical infrastructure, and that the company set borrowers up to fail with loans they could not afford. According to the lawsuit, roughly 1-in-4 Colony Ridge loans ended in foreclosure, but the company “repurchased” the properties from itself to sell them again to unsuspecting new borrowers.
The settlement agreement proposed by the Trump-Vance administration asks the court to enter this agreement and retain jurisdiction to enforce it, which the organizations submitting today’s friend of the court brief argue is improper and unlawful given that these immigration and law enforcement provisions are unrelated to the underlying case.
The coalition of organizations is represented by Democracy Forward, Relman Colfax PLLC, and the National Fair Housing Alliance.
Core Legal Problem
“Discrimination is not a paperwork violation — it is a devastating harm that strips families of wealth, stability, and opportunity. When Latino families are targeted for predatory homeownership schemes, are concentrated in poorly resourced neighborhoods, and lose their hard‑earned savings, justice requires more than infrastructure upgrades,” said Lisa Rice, President and CEO, National Fair Housing Alliance. “It requires restitution. It requires accountability. And it requires a clear message that discrimination will not be tolerated. Americans across backgrounds believe housing has become unfair, unaffordable, and increasingly inaccessible, and they expect the government to take meaningful action to prevent and remedy discrimination. By approving a settlement that offers no direct relief to families who were misled and harmed, the CFPB and the DOJ would fall short of the duty Americans believe is essential to restoring fairness and protecting access to the American Dream.”
“This proposed settlement does nothing to end discrimination or provide justice for its victims,” said Leah Nicholls, Director of Public Justice’s Access to Justice Project. “Instead of providing harmed families with real relief, it subjects them to surveillance and additional risk of deportation–harming them twice over and undermining the vision of our equal housing and lending laws.”