On April 28, the U.S. District Court for the Southern District of Texas dismissed with prejudice a predatory lending and land sales case, while expressing serious concerns about the parties’ settlement agreement (covered by InfoBytes here). The case, initially brought by DOJ, the CFPB, and the state of Texas, alleged that the defendants violated the ECOA and the Fair Housing Act by targeting Hispanic consumers with predatory financing and unlawful practices. As previously covered by InfoBytes, the parties had initially sought court-retained jurisdiction to enforce their settlement, but after the court raised concerns at an April 10 hearing, they filed a joint stipulation of dismissal under Federal Rule of Civil Procedure 41(a)(1)(A)(ii), withdrawing their request for continuing jurisdiction.

In its order, the court stated that the settlement agreement “bears little relationship to the claims asserted in the [c]omplaint.” Specifically, the court noted that rather than compensating the borrowers allegedly harmed, the settlement allocated $48 million for infrastructure improvements and $20 million for law enforcement, including immigration enforcement — relief the court found was neither pled nor sought in the complaint. The court stated that the settlement “risks exacerbating harm to the very consumers the Complaint purported to protect,” observing that increased immigration enforcement may further marginalize Hispanic consumers and that infrastructure improvements may primarily benefit the defendants rather than displaced borrowers. The court also criticized provisions requiring only that the defendants prepare written “proposals” to reduce foreclosures, stating that “[a] promise to propose is not remediation, and a plan to formulate relief is not relief delivered.” While acknowledging that the parties remain free to resolve the case on their own terms, the court declined to retain jurisdiction or “put its imprimatur on a [s]ettlement [a]greement that does not meaningfully resolve the claims presented.”