Justice Department Sues Realtor Over Unauthorized Loans To Hispanic Buyers

WASHINGTON, DC – The Justice Department on Wednesday launched its first predatory mortgage lawsuit against a Texas real estate company accused of luring tens of thousands of Hispanic homebuyers into deceptive sales.

The lawsuit targets Colony Ridge, a development northeast of Houston that promises to buy homes with Spanish-language ads, but then directs applicants to buy properties without basic services with loans they can’t always repay, the Justice Department says.

According to the lawsuit, the real estate company uses high-pressure sales tactics that take advantage of limited English skills.

“The impact of this illegal, discriminatory and fraudulent scheme is devastating,” said Deputy Attorney General Kristen Clarke, who oversees the agency’s civil rights division.

Many buyers found that the plots lacked basic services or were prone to flooding from rain and sewage.

Colony Ridge CEO John Harris said in a statement that the lawsuit is “baseless and both outrageous and outrageous.”

“Our business thrives on customer referrals because homeowners are happy and can experience the American dream of home ownership,” he said.

According to real estate app Redfin, the median home sale price in the United States fell by nearly $18,000, the biggest drop in a decade. To see more from Telemundo, visit https://www.nbc.com/networks/telemundo

“We lend to those who don’t have the opportunity to get a loan from anyone else and are proud of the relationships we’ve built with our customers.”

Colony Ridge real estate developer Trey Harris previously admitted to The Associated Press that his company makes loans to customers at higher-than-usual interest rates, but said banks don’t make those loans. He denied that the real estate company was to blame for the flooding problems in the area.

The real estate project is home to more than 40,000 people and has a geographic footprint almost as large as Washington DC

It grew quickly, thanks in part to TikTok advertising and loans that didn’t require a credit check and only required a small deposit.

But those loans had high interest rates and the company did not verify that customers could repay them, authorities said.

Between 2019 and 2022, Colony Ridge foreclosed on at least 30% of its seller-financed properties within three years, according to the Justice Department.

“Actually, exclusion is part of the business of Colony Ridge. When a family falls behind on payments and loses their property, Colony Ridge buys it back and sells it to another buyer, often at a higher price,” said Rohit Chopra, director of the US Consumer Financial Protection Bureau (CFPB). English).

The real estate development has drawn national attention in recent months, with conservative media and GOP activists alleging, without justification, that it is a magnet for migrants living in the United States illegally and that cartels control some areas of the neighborhood.

There was no evidence to support such claims and residents, local authorities and the property company disputed the allegations.

The Justice Department’s new lawsuit alleges unlawful discrimination and seeks unspecified civil penalties as well as damages for customers.

One woman used the proceeds from the sale of her mother’s house to buy a house in Colony Ridge, only to find she would have to invest much more in basic infrastructure.

During heavy rains, the property floods so much that he can’t get in or out of the neighborhood, Clarke said.

The case is also part of the department’s work to combat the illegal practice of lenders avoiding lending to people because of their race, color or nationality.

“Colony Ridge decided to capitalize on something as old as America: the immigrant dream of home ownership,” said Alamdar Hamdani, U.S. Attorney for the Southern District of Texas. Their practices “often ended with families facing financial ruin, homelessness and shattered dreams.”

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