Houston, February 11, 2026
Colony Ridge has reached a $68 million settlement with the Department of Justice and the State of Texas, addressing allegations of predatory lending and deceptive sales practices. As part of the agreement, they will halt the construction of new residential lots for three years. The settlement aims to enhance consumer protection and fund critical infrastructure improvements while highlighting the need for transparency in Texas real estate.
Houston
Colony Ridge Settles Lending Lawsuit, Halts Construction
Developers agree to a $68 million settlement and a three-year construction pause to resolve predatory lending and deceptive sales allegations with the Department of Justice and the State of Texas.
Houston’s dynamic economic landscape is often shaped by significant development projects and the legal frameworks that govern them. Ensuring fair practices and transparent operations is crucial for maintaining a robust market where entrepreneurial innovation can thrive and individuals can confidently pursue property ownership. The recent settlement involving Colony Ridge, a substantial residential development northeast of Houston, underscores the ongoing commitment to these principles, highlighting how regulatory oversight helps cultivate a stable environment for both developers and consumers in the evolving Houston TX business sector.
This resolution, stemming from legal actions by the Department of Justice and the State of Texas, marks a pivotal moment for a community that has experienced rapid growth and considerable attention. It reflects a collective effort to address complex challenges that arose within the development’s operational model, aiming to reinforce standards that protect aspiring property owners and foster sustainable community development across Texas. For many Texas TX entrepreneurs, this outcome serves as a reminder that clear guidelines are essential for long-term success and public trust.
The Settlement’s Comprehensive Terms
Colony Ridge Land LLC and its affiliates have agreed to a significant $68 million settlement to resolve lawsuits accusing them of predatory lending practices and deceptive sales. As part of this agreement, the developers will halt the platting of new residential lots for direct-to-consumer sales for a period of three years. Despite agreeing to the terms, the developers deny any wrongdoing in the case. The settlement aims to resolve both federal and state cases against the developers, establishing new restrictions on future development and requiring financial penalties along with infrastructure improvements.
The $68 million settlement will be allocated to various critical areas, including infrastructure enhancements and increased law enforcement presence within the development. Specifically, $48 million is earmarked for comprehensive infrastructure improvements such as flood control, roads, sewage, and waste management. Another $20 million will be dedicated to bolstering law enforcement efforts, including funding for a new police station and additional officers, alongside support for immigration enforcement partnerships. This substantial investment underscores the commitment to fostering a safe and well-equipped environment for residents.
Addressing Allegations of Predatory Practices
The core of the lawsuits, filed by the Department of Justice and the Consumer Financial Protection Bureau in December 2023, and subsequently by the Texas Attorney General in March 2024, centered on allegations of a predatory lending scheme that targeted Hispanic consumers. It was alleged that Colony Ridge used misleading advertising, often in Spanish, to attract buyers, while important transaction documents were frequently provided only in English, creating significant language barriers.
Accusations included selling flood-prone land without essential infrastructure like water, sewer, or electricity, and setting up borrowers with loans they could not afford. The developers were alleged to have offered seller-financed loans without adequately assessing a borrower’s ability to repay, which regulators claim led to exceptionally high foreclosure rates. Records indicated that approximately one in three Colony Ridge loans resulted in foreclosure within three years, a rate ten times higher than the national average at the time the federal lawsuit was filed. Furthermore, Colony Ridge reportedly accounted for over 92% of all foreclosures recorded in Liberty County between 2017 and 2022. After foreclosing, the company was accused of repurchasing properties and reselling them, sometimes multiple times, perpetuating a cycle of financial hardship for buyers.
Implementing New Standards for Fair Development
The settlement mandates a series of new standards designed to enhance consumer protection and ensure more equitable land sales practices. A key component is the immediate 36-month freeze on new platting of residential lots intended for direct-to-consumer sales, effectively halting new construction for this period.
Future sales will also be subject to stricter buyer identification requirements. Purchasers must present an unexpired Texas-issued driver’s license or identification card, or a valid passport and visa, and undergo checks to ensure they are not on terrorism watchlists or affiliated with transnational criminal organizations. The company is also required to verify compliance with Texas laws that restrict certain real estate transactions involving designated foreign countries. These measures are aimed at fostering greater transparency and security in property transactions.
Furthermore, Colony Ridge must adopt formal underwriting standards, moving away from previous practices that allegedly did not verify income or ability to pay. A new default-avoidance plan will be implemented to help reduce foreclosures, and buyers will receive expanded disclosures covering utility availability, flood risks, permitting timelines, and the true total cost of ownership. Advertising practices will also be more tightly regulated, prohibiting the marketing of properties as “move-in ready” or fully serviced unless utilities are immediately available. These changes are intended to equip buyers with comprehensive information, promoting informed decisions and protecting against unforeseen costs, which is vital for any thriving Houston small business community.
Investing in Community and Public Safety
The substantial financial commitment outlined in the settlement will directly benefit the existing Colony Ridge community and surrounding areas. The $48 million designated for infrastructure improvements will address critical needs such as drainage systems, flood control, roads, and proper management of sewage and waste. Independent Texas-based engineering firms will be brought in to reevaluate drainage systems, design improvements to handle major storm events, and conduct recurring inspections, prioritizing existing deficiencies. These enhancements are fundamental to improving the habitability and safety of the development.
An additional $20 million will be allocated over the next decade to increase law enforcement presence within Colony Ridge. This funding can be used for local patrols, the construction of a police station operated by the Texas Department of Public Safety or the County Constable, additional officers, equipment, and expanded immigration enforcement partnerships. This commitment to public safety is a significant step toward ensuring a secure environment for all residents and promoting broader economic growth in the region.
Colony Ridge’s Role in Regional Development
Colony Ridge, located approximately 30 miles northeast of Downtown Houston in unincorporated Liberty County, has expanded significantly since its operations began in 2011. The development encompasses 33,000 acres, featuring six subdivisions and over 40,000 residential lots developed over more than a decade. Population estimates for Colony Ridge vary widely, with developers claiming around 40,000 residents, while Liberty County officials suggest numbers between 75,000 and 100,000, predominantly Latino residents. The rapid population influx has notably impacted local services, including the Cleveland Independent School District, which has faced capacity issues and sought to create more space.
The developers’ stated mission has been to offer an alternative path to land ownership through flexible financing options without traditional credit checks, aiming to make land accessible for hardworking families. This approach positioned Colony Ridge as one of the fastest-growing residential communities in Texas. However, the settlement underscores the importance of adhering to consumer protection laws and ensuring adequate infrastructure and transparent lending practices are in place, regardless of the target demographic or financing model.
Broader Implications for Houston’s Economic Future
This settlement sends a clear message across the Houston metropolitan area and the wider state about the importance of ethical business practices and strong consumer protections. For Houston TX business and developers, it highlights the necessity of transparent operations, especially when offering seller-financed options, and the responsibility to provide accurate information regarding property conditions and available infrastructure.
The emphasis on enhanced regulatory compliance and significant investments in community infrastructure through this settlement can set a precedent for future developments. It reminds all Texas TX entrepreneurs that long-term success is intertwined with consumer trust, community well-being, and adherence to established legal frameworks. By ensuring a fair and equitable marketplace, Houston can continue to foster a thriving environment for innovation, attract private investment, and support the resilience of its small businesses, contributing to sustained economic growth and community insights throughout the region.
Conclusion
The settlement reached with Colony Ridge developers marks a significant step towards ensuring fair and transparent practices within large-scale residential developments near Houston. By addressing allegations of predatory lending and deceptive sales, and mandating substantial investments in infrastructure and law enforcement, the agreement aims to foster a more stable and equitable environment for current and future residents. This resolution underscores the vital role of clear regulatory oversight in upholding consumer confidence and promoting sustainable development for all who contribute to Houston’s vibrant economic future. We encourage our readers to stay informed and engaged in the discussions shaping Houston’s economic landscape and to support local businesses committed to ethical growth.
Frequently Asked Questions about the Colony Ridge Settlement
What is the Colony Ridge settlement?
The Colony Ridge settlement is an agreement where Colony Ridge developers will pay $68 million and halt construction of new residential lots for direct-to-consumer sales for three years, resolving predatory lending lawsuits with the Department of Justice and the State of Texas.
How much will Colony Ridge developers pay in the settlement?
Colony Ridge developers will pay $68 million as part of the settlement.
What are the main allegations against Colony Ridge?
The main allegations against Colony Ridge included targeting Hispanic consumers with misleading advertisements, selling flood-prone land lacking essential infrastructure like water, sewer, or electricity, and offering high-interest seller-financed loans without assessing borrowers’ ability to repay. These practices allegedly led to high foreclosure rates.
How will the $68 million settlement funds be used?
Of the $68 million, $48 million is allocated for infrastructure improvements (including roads, drainage, flood control, sewage, and waste management), and $20 million is for increased law enforcement presence (including a police station, additional officers, and immigration enforcement partnerships).
What new requirements are placed on Colony Ridge for future sales?
New requirements include a three-year halt on new residential platting for direct-to-consumer sales, stricter buyer identification (Texas ID or valid passport/visa, checks against terrorism watchlists, compliance with Texas laws on foreign country real estate transactions), formal underwriting standards, a default-avoidance plan, and expanded disclosures regarding utilities, flood risks, permitting, and true cost of ownership.
Will construction stop completely at Colony Ridge?
The settlement includes a 36-month (three-year) halt on the platting of new residential lots for direct-to-consumer sales, effectively pausing new construction approvals in that specific segment.
Key Features of the Colony Ridge Settlement
| Feature | Details | Scope |
|---|---|---|
| Settlement Amount | $68 million | State-level, Nationwide |
| Construction Halt | 3-year halt on new residential platting for direct-to-consumer sales | State-level |
| Infrastructure Investment | $48 million for roads, drainage, flood control, sewage, and waste management | State-level |
| Law Enforcement Funding | $20 million for increased police presence, police station, additional officers, and immigration enforcement partnerships | State-level, Nationwide |
| New Buyer Requirements | Stricter identification (Texas ID or valid passport/visa), checks against terrorism watchlists, compliance with Texas laws on foreign country real estate transactions | State-level, Nationwide |
| Lending Standards | Formal underwriting standards and default-avoidance plan mandated | Nationwide |
| Enhanced Disclosures | Expanded information on utilities, flood risks, permitting timelines, and total cost of ownership | Nationwide |
| Advertising Restrictions | Prohibition on misleading advertising, such as “move-in ready” without immediate utilities | Nationwide |
| Denial of Wrongdoing | Developers deny any wrongdoing as part of the settlement agreement | Nationwide |
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Author: STAFF HERE HOUSTON TX WRITER
The HOUSTON STAFF WRITER represents the experienced team at HEREHouston.com, your go-to source for actionable local news and information in Houston, Harris County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Houston Livestock Show and Rodeo, Art Car Parade, and Chevron Houston Marathon. Our coverage extends to key organizations like the Greater Houston Partnership and Houston Area Urban League, plus leading businesses in energy and healthcare that power the local economy such as ExxonMobil, Schlumberger, and Houston Methodist. As part of the broader HERE network, including HEREAustinTX.com, HERECollegeStation.com, HEREDallas.com, and HERESanAntonio.com, we provide comprehensive, credible insights into Texas's dynamic landscape.
