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THE GARDEN ISLAND
Friday, December 22, 2023 • B3
Developer accused of ‘bait and switch’ Lindsay Whitehurst ASSOCIATED PRESS WASHINGTON, D.C. — The Justice Department filed its first predatory mortgage lending case Wednesday against a Texas developer accused of luring tens of thousands of Hispanic homebuyers into “bait and switch” sales through platforms like TikTok. The lawsuit focuses on a massive development northeast of Houston, Colony Ridge, that promises homeownership with advertisements in Spanish, but then steers applicants into buying properties without basic utilities by taking out loans they can’t always repay, the Justice Department alleged. The suit said the developer uses high-pressure sales tactics that exploit limited English proficiency. “The impact of this unlawful, discriminatory and fraudulent scheme is devastating,” said Assistant Attorney General Kristen Clarke, who oversees the department’s civil rights division. Many buyers found the lots didn’t have basic utilities, or were prone to flooding with rain and raw sewage. Colony Ridge CEO John Harris said in a statement that 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,” he said. “We loan to those who have no opportunity to get a loan from anyone else and we are
Long-term mortgage rate hits 6-month low ASSOCIATED PRESS LOS ANGELES — Home loan financing costs eased again this week, pulling the average longterm U.S. mortgage rate down to a six-month low. The average rate on a 30-year mortgage dropped to 6.67 percent from 6.95 percent last week, mortgage buyer Freddie Mac said Thursday. A year ago, the rate averaged 6.27 percent. The latest drop in rates is the eighth in as many weeks. The average rate is now back to where it was in late June. “The 30-year fixed-rate mortgage remained below 7 percent for the second week in a row, a welcome downward trend after 17 consecutive weeks above 7 percent,” said Sam Khater, Freddie Mac’s chief economist. Borrowing costs on 15-year fixed-rate mortgages, popular with homeowners refinancing their home loan, also declined this week, with the average rate falling to 5.95 percent from 6.38 percent last week. A year ago, it averaged 5.69 percent, Freddie Mac said. Mortgage rates have been easing since late October, when the average rate on a 30-year home loan reached 7.79 percent, the highest level since late 2000. The decline has tracked the trajectory of the 10-year Treasury yield, which lenders use as a guide to pricing loans. The yield, which in mid October surged to its highest level since 2007, has been falling on hopes that inflation has cooled enough for the Federal Reserve to shift to cutting interest rates after yanking them dramatically higher since early last year. Investors’ expectations for future inflation, global demand for U.S. Treasurys and what the Fed does with its benchmark federal funds rate can influence rates on home loans. The sharp runup in mortgage rates that began early last year has pushed up borrowing costs on home loans, reducing how much would-be homebuyers can afford even as home prices have kept climbing due to a stubbornly low supply of properties on the market.
This fall, the neighborhood attracted other national attention as conservative media and GOP activists pushed unsubstantiated claims that it was a magnet for immigrants living in the U.S. illegally and that cartels control pockets of the neighborhood. There was no evidence to support the claims, and residents, local officials and the developer disputed the portrayals. The new Justice Department suit, on the other hand, alleges unlawful discrimination and seeks unspecified civil penalties as well as compensation for customers. One woman used the proceeds from selling her mother’s home to buy into Colony Ridge, only to be find she’d have to spend thousands more to set up basic infrastructure. During heavy rains, the property floods so badly that she cannot enter or leave the neighDAVID J. PHILLIP / ASSOCIATED PRESS FILE borhood, Clarke said. The case is also part of the deSigns fill the lawn of a model home in the Santa Fe subdivision of the Colony Ridge developpartment’s work to fight redlinment in Cleveland, Texas, on Tuesday, Oct. 3, 2023. The Justice Department filed its first preding, an illegal practice in which atory mortgage lending case Wednesday, Dec. 20, 2023, against a Texas developer accused of lenders avoid providing credit to luring tens of thousands of Hispanic homebuyers into “bait and switch” sales through platpeople because of their race, forms like TikTok. color or national origin. proud of the relationship we “Colony Ridge set out to exat least 30 percent of its seller-fiThe development is home to have developed with custommore than 40,000 people and its nanced lots within three years, ploit something as old as Amergeographic footprint is nearly according to the Justice Depart- ica — an immigrant’s dream of ers.” the size of Washington, D.C. It’s Colony Ridge developer Trey owning a home,” said U.S. Attorment. been growing quickly, in part Harris has previously acknowl“Foreclosure is actually a part ney Alamdar Hamdani for the with TikTok advertising and of Colony Ridge’s business. Southern District of Texas. edged to The Associated Press When a family falls behind on Their practices “often ended that his company provides loans loans that required no credit check and only a small deposit. payments and loses their propwith families facing economic to customers at interest rates But those loans had high inter- erty, Colony Ridge buys back the ruin, no home, and shattered that are higher than typical, but dreams.” he said banks won’t provide est rates and the company didn’t property and flips it to another ••• those loans. buyer, often at a higher price,” check that customers could afAssociated Press writer Juan He denied that the developsaid Rohit Chopra, director of ford them, authorities said. BeLozano in Houston contributed to the Consumer Financial Protecment was responsible for floodtween 2019 and 2022, Colony this story. Ridge initiated foreclosures on ing problems in the area. tion Bureau.