“A Slap in the Face”: Trump’s DOJ Plans to Settle Predatory Lending Case Without Compensating Victims |
In December 2023, the U.S. Justice Department sued a Texas land developer it accused of duping tens of thousands of Hispanic residents into predatory mortgages, a landmark case for the Biden administration.
Colony Ridge, which sold plots in massive subdivisions north of Houston, had become a “one-stop shop for discriminatory lending,” Kristen Clarke, assistant attorney general for civil rights, said at a news conference announcing the lawsuit. The developer targeted Hispanic applicants through false advertising and persuaded them to take out high-interest loans that many could not afford, then benefited when it foreclosed on their properties, the lawsuit alleged.
“Our goal at the end of the day is to ensure that victims are compensated for their loss,” Clarke declared.
Three years later, the Trump administration and Colony Ridge are on the verge of resolving the case. But the $68 million proposed settlement provides no money for victims of the alleged scheme. Instead, it sets aside $20 million for policing and immigration enforcement — a provision that may be used to target the very people who were victimized by the developer, according to former government officials who worked on such cases.
“I’ve never seen a settlement like this, with a complete misalignment between what you’re settling and what the resolution is,” said Elena Babinecz, who led fair lending investigations at the Consumer Financial Protection Bureau for 12 years under the Obama, Trump and Biden administrations, before leaving in October.
“It’s a slap in the face to the individuals that were harmed; that the Justice Department acknowledges were harmed,” said Babinecz, who was at the bureau when it joined the Justice Department in filing suit against Colony Ridge. “It’s a complete misjustice, and it’s not at all why these civil rights laws were passed.”
The Justice Department’s proposed settlement in the Colony Ridge case sets aside $20 million for policing and immigration enforcement but no money for victims of the alleged scheme. U.S. District Court for the Southern District of Texas. Highlighted by ProPublica and The Texas Tribune.Seven other attorneys and investigators who formerly enforced the federal government’s lending and housing civil rights laws also told ProPublica and The Texas Tribune that they were stunned by the agreement, which a U.S. district judge must still approve. Indeed, Colony Ridge is the largest Justice Department case since at least 2018 in which the settlement includes no monetary compensation for victims. The judge has scheduled a hearing on Friday over the proposal.
A coalition of fair housing and civil rights groups has urged the court to reject the settlement, arguing the lawsuit is the only realistic prospect for many consumers to get recompense because they cannot afford private attorneys.
The Justice Department had built a case against Colony Ridge with “stark and overwhelming evidence,” Clarke told the news organizations. Prosecutors said Colony Ridge repeatedly misled consumers about the condition of lots they purchased, forcing them to spend hundreds or thousands on drainage improvements and utility connections they hadn’t known the land needed. This contributed to consumers defaulting on high-interest loans, according to the lawsuit. Colony Ridge then benefited from the improvements made to the land it foreclosed on and resold the lots at higher prices.
In the end, tens of thousands of victims were exploited through the developer’s predatory practices in a span of eight years,........