Judge Bennett Questions Lack of Victim Compensation in Settlement

The U.S. Department of Justice is proceeding with a $68 million settlement with a Texas land developer despite warnings from a federal judge that the agreement fails to provide meaningful relief to victims of alleged predatory lending.

The settlement resolves a legal dispute involving the Colony Ridge development in the Houston suburbs. While the original lawsuit accused the developer of defrauding tens of thousands of Hispanic residents through predatory mortgages, the final agreement provides no financial compensation for the individuals harmed by these schemes.

Allocation of Settlement Funds

A significant portion of the $68 million settlement is earmarked for policing and immigration enforcement. Specifically, $20 million of the funds are devoted to law enforcement, a provision that was not included in the original lawsuit.

Legal experts and former government officials have criticized the deal, arguing that the allocation of funds to immigration enforcement could potentially target the same vulnerable populations that were victimized by the developer’s lending practices.

Origins of the Lawsuit

The legal action began in December 2023, when the Justice Department and the Consumer Financial Protection Bureau (CFPB) sued the developer. Prosecutors described the operation as a one-stop shop for discriminatory lending.

The government alleged that the developer used false advertising to attract Hispanic applicants into high-interest loans they could not afford. This strategy allegedly allowed the developer to profit through the subsequent foreclosures of those properties.

Judicial Concerns and DOJ Response

During a hearing, U.S. District Judge Alfred H. Bennett expressed profound discomfort with the terms of the settlement. Judge Bennett questioned the sudden shift in the case’s focus, moving from consumer fraud and victim relief to public safety and law enforcement.

Where Did That Come From?

U.S. District Judge Alfred H. Bennett

Judge Bennett suggested revisions to the settlement to ensure that the victims of the predatory lending were compensated. Jason Ray, the attorney representing the developer, indicated that his client would consider the judge’s suggestions for revision.

Despite the judge’s concerns and the developer’s willingness to consider changes, the Justice Department declined to revise the agreement and is moving forward with the settlement as written.