Feds sue Texas-based developer over alleged illegal land sales scheme, predatory financing
‘Reverse redlining’ is when a community or group is targeted for unfair credit or lending terms
(InvestigateTV) — The Justice Department and the Consumer Financial Protection Bureau (CFPB) has sued Colony Ridge, a Texas based lender and developer, for allegedly operating an illegal land sales scheme and targeting tens of thousands of Hispanic borrowers with false statements and predatory loans.
Nicole Cabañez with the National Consumer Law Center (NCLC) said the lawsuit claims that Colony Ridge targeted Latinos, assuming that the community had limited access to credit.
“The CFPB and the DOJ sued them for violating a range of mortgage law,” Cabañez explained. “But importantly, they sued under the Fair Housing Act and the Equal Credit Opportunity Act for ‘reverse redlining.’”
The 45-page complaint alleges that Colony Ridge targeted Spanish speaking borrowers by advertising exclusively in Spanish, using TikTok and other social medial platforms to attract them, and showcasing national flags from multiple Latin American countries and regional music.
The complaint also claims the company sold unsuspecting families flood-prone land without water, sewer or electrical infrastructure, and set them up to fail with loans they can’t afford.
“That’s essentially the message that this lawsuit is putting out into the world,” Cabañez said. “That you cannot, you cannot target a population that you consider to be vulnerable with expensive products that are built to fail.”
Cabañez said these types of alleged practices happen often to Hispanic communities and non-English speakers.
“There’s a certain kind of helplessness that comes from having these language barriers and having just these other vulnerabilities and then you’re trying to build your life in this country and then on top of it all you’re in a financial transaction that was honestly never meant to help you,” she noted.
When asked for comment, Colony Ridge said in a statement that they were blindsided by this lawsuit, saying it was “baseless and both outrageous and inflammatory.” They added that their business thrives off customer referrals because landowners are happy and able to experience the American dream of owning property. They also stated that they’re happy to loan to those who have no opportunity to get a loan from anyone else and are proud of the relationship they’ve developed with customers.
Cabañez shared several red flags to avoid when applying for a loan or mortgage:
Lack of careful analysis of personal financial information before approving credit – this could likely lead to very expensive credit interest rates or fees.
Marketing materials in a specific language other than English – this could be a sign that a particular group is being targeted for nefarious reasons.
A rush or push to apply and make decisions quickly: this could mean a lender or business partner is trying to gloss over unfavorable terms.
To report suspected or actual lending fraud, visit Consumer Financial Protection Bureau to file a complaint.
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