On February 10, DOJ announced a settlement agreement, pending approval in the U.S. District Court for the Southern District of Texas, resolving claims brought by DOJ, the CFPB, and the state of Texas against a land developer and lender near Houston in December 2023. As previously covered by InfoBytes, the plaintiffs alleged violations of the ECOA and the FHA, asserting that the defendants intentionally targeted Hispanic consumers with predatory financing and land sales and engaged in false, misleading, and deceptive sales, marketing, and lending practices in violation of the CFPA, the Texas Deceptive Trade Practices Act, and the Interstate Land Sales Full Disclosure Act.

The settlement requires the defendants to, among other things: (i) invest $48 million in infrastructure improvements, including $18 million for drainage and flood control and $30 million for general infrastructure upgrades; (ii) adopt underwriting standards to ensure borrowers’ ability to repay; (iii) implement a default avoidance plan; (iv) develop policies to reduce foreclosures and address credit harm; (v) halt new residential plat development for direct-to-consumer sales for three years; (vi) increase law enforcement presence with a $20 million investment; and (vii) ensure accurate advertising and pre-sale disclosures regarding property conditions and utility access. The settlement did not include any admission of wrongdoing.

Following the proposed settlement’s filing, eight civil rights and consumer advocacy organizations filed an amicus brief challenging the proposed settlement. The amici argued that the motion effectively asks the court to enter a consent decree, obliging the court under 5^th Circuit precedent to scrutinize the agreement’s reasonableness, and that the agreement fails that standard because: (i) the settlement’s $20 million immigration enforcement funding provision does not arise from the pleaded fair lending and civil rights claims; (ii) the settlement fails to provide direct financial relief to affected consumers; and (iii) it unreasonably affects third parties, namely the communities the suit was intended to protect, by potentially subjecting residents to heightened immigration enforcement. The court has not yet ruled on the challenge or entered the settlement.