Lead

The U.S. Justice Department announced Friday it will proceed with a proposed $68 million settlement with Colony Ridge, a Texas land developer accused of predatory lending practices against Hispanic residents, despite a federal judge's concerns that the agreement fails to compensate victims. The settlement allocates $20 million to policing and immigration enforcement, a provision that has drawn criticism from former government officials and legal experts.

Coverage Comparison

Reporting from ProPublica details that the Justice Department filed suit against Colony Ridge in December 2023, accusing the developer of deceiving tens of thousands of Hispanic residents into high-interest mortgages through false advertising. The proposed settlement, which has yet to receive judicial approval, has raised eyebrows because it excludes direct payments to victims.

U.S. District Judge Alfred H. Bennett, presiding over the case, questioned the settlement's structure during a recent hearing. According to ProPublica's account, Bennett expressed discomfort with the law enforcement funding, noting that neither the federal nor state lawsuits mentioned public safety or immigration concerns. He asked, "Who in the settlement room said it would be a good idea to give $20 million to law enforcement?"

Senior Justice Department prosecutor Varda Hussain defended the provision, saying it originated from Texas Attorney General Ken Paxton's office and citing residents' concerns about crime after the lawsuit was filed. Paxton's office, which filed a parallel lawsuit covered by the settlement, did not respond to requests for comment.

Key Claims

The central facts, as reported by multiple outlets, include:

  • The Justice Department proposed a $68 million settlement with Colony Ridge, with $20 million designated for policing and immigration enforcement.
  • The settlement does not include direct compensation for individuals allegedly harmed by Colony Ridge's practices.
  • The 2023 lawsuit accused Colony Ridge of using false advertising to persuade Hispanic applicants to take out unaffordable high-interest loans, leading to foreclosures.
  • Judge Bennett questioned the settlement during a hearing, specifically challenging the lack of victim compensation and the law enforcement allocation.
  • The Justice Department stated it would pursue the settlement without seeking judicial approval.

Perspectives

Critics, including former government officials, argue that the settlement fails its core purpose. Elena Babinecz, who led fair lending investigations at the Consumer Financial Protection Bureau for 12 years under three administrations, called the settlement "a slap in the face" to victims and "a complete misjustice." She noted that the resolution is misaligned with the lawsuit's allegations of discriminatory lending.

ProPublica also notes that only 6% of the 183 housing and civil enforcement settlements announced by the Justice Department since 2018 excluded victim compensation, making this case an outlier. The absence of victim payments, coupled with funding for law enforcement that could target the same immigrant community, has raised concerns among advocates about the message the settlement sends.

The Justice Department and Colony Ridge have not issued public statements beyond the hearing, and the case remains under judicial review. The settlement's ultimate impact on the community and its residents remains to be seen, as experts and observers await the court's next steps.