Colony Ridge settles for $68M over alleged predatory land sales

"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."

"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. 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."

Colony Ridge entered a settlement with the DOJ, CFPB and Texas OAG while expressly denying any alleged wrongdoing. Federal agencies alleged misleading sales tactics, misrepresentations about flood risks, and failures to verify borrowers' ability to repay, contributing to high foreclosure rates. The agreement requires $48 million for infrastructure improvements, including $18 million for drainage, new underwriting standards to assess repayment ability, and foreclosure-reduction policies. An additional $20 million will fund increased law enforcement presence and compliance efforts. The company must use ILSA's intrastate land sales exemption and require valid identification from purchasers, including specified Texas IDs or qualifying passports.

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