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Watch out for land developers who advertise on social media and prey on vulnerable groups

Flood-4999304_640Be sure to research any company carefully if you’re considering a land deal.

Agencies sue developer

A Texas-based developer and lender operated an illegal land sales scheme and targeted tens of thousands of Hispanic borrowers with lies and predatory loans, according to a lawsuit filed Wednesday by the Consumer Financial Protection Bureau and the Justice Department.

The lawsuit alleges Colony Ridge sells unsuspecting families flood-prone land without water, sewer, or electricity, and that the company sets borrowers up to fail with loans they can’t afford. About one-in-four Colony Ridge loans ends in foreclosure, then the company repurchases the properties and sells them to new borrowers.

“The CFPB and Justice Department lawsuit in federal court charges Colony Ridge with a slew of illegal misconduct and seeks to stop this set-up-to-fail scheme that has led thousands of families to lose their dreams of homeownership,” said CFPB Director Rohit Chopra. “Our investigation uncovered that Colony Ridge is baiting borrowers with lies, saddling families with predatory loans for homesites that the company knows have repeatedly flooded with raw sewage and lacked basic utility infrastructure.”

Social media used to target immigrants

Colony Ridge uses social-media applications to target and mislead consumers to exploit immigrants’ dream of owning a home, said U.S. Attorney Alamdar S. Hamdani for the Southern District of Texas.

“As alleged in the complaint, Colony Ridge’s exploitative practice began with misleading advertising on platforms like TikTok and often ended with families facing economic ruin, no home and shattered dreams,” said Hamdani.

Colony Ridge has developed more than 40,000 lots spread across an unincorporated area of Liberty County, Texas, 30 miles northeast of Houston. Colony Ridge markets these subdivisions using the names “Terrenos Houston” and “Terrenos Santa Fe.”

Colony Ridge targets Spanish-speaking borrowers: it advertises almost always in Spanish, often in TikTok or other social media posts featuring, for example, national flags and regional music from Latin America. In these advertisements, Colony Ridge promises consumers the dream of home ownership with its own seller financing: an easy-to-obtain loan product that requires no credit check and only a small deposit, the agencies said in a statement.

Hispanic consumers lured into predatory loans

The lawsuit alleges that Colony Ridge has lured tens of thousands of Hispanic consumers into their predatory loan products. Foreclosure and property deed records from September 2019 through September 2022 show that Colony Ridge initiated foreclosures on at least 30 percent of seller-financed lots within three years of the purchase date, with most loan failures occurring even sooner. Records also confirm that Colony Ridge accounted for more than 92 percent of all foreclosures recorded in Liberty County between 2017 and 2022.

In addition, Colony Ridge conducts most of its marketing activities in Spanish. However, when it comes to the actual transaction, it offers important documents only in English, according to the lawsuit.

Agencies aim to stop developer and return funds to those harmed

The agencies are seeking redress for borrowers harmed by Colony Ridge and an end to its illegal practices.

So, check into any firm that offers a deal that sounds too good to be true. You could save yourself a lot of trouble and financial ruin.

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