(Reuters) -Federal prosecutors and the top U.S. agency for consumer financial protection are suing a Texas real estate developer they accused of targeting thousands of Hispanic borrowers in a fraudulent land sale scheme, they announced on Wednesday.
According to federal officials, Colony Ridge, a real estate developer located in Liberty County, Texas, about 30 miles (48 km) northeast of Houston, sold unaffordable loans so unsuspecting families could purchase flood-prone land that had no connections to sewage lines or other utilities. After foreclosure, the company allegedly resold plots to new buyers.
"Colony Ridge promised the American dream, but we allege that in reality, it has delivered a nightmare for thousands of hardworking Hispanic families who hoped to build their homes in the Terrenos Houston community," Kristen Clarke, assistant attorney general for civil rights in the Department of Justice, said in a statement.
The case was brought jointly by the Justice Department and the U.S. Consumer Financial Protection Bureau.
Colony Ridge said in a statement that the lawsuit was "baseless."
It is the first-ever predatory mortgage lending case brought by the Justice Department under the Fair Housing Act and Equal Credit Opportunity Act, Clarke told reporters in Washington.
The Consumer Financial Protection Bureau said it was the agency's first federal lawsuit charging violations of the Interstate Land Sales Full Disclosure Act.
Colony Ridge CEO John Harris in a statement said the company looked forward to defending itself.
"The lawsuit is baseless and both outrageous and inflammatory. Our business thrives off customer referrals because landowners are happy and able to experience the American Dream of owning property," Harris said.