The owners of Colony Ridge, a Houston-area developer accused of running a predatory lending scheme that deceived Latinos, agreed to a sweeping legal settlement that will require them to invest in law enforcement and infrastructure on their properties and tighten selling practices to address a range of accusations from Texas GOP leaders and conservative media.

Chief among the allegations was that Colony Ridge developers sold land to undocumented people, giving rise to a crime-ridden complex of subdivisions about 30 miles outside Houston allegedly being run by Mexican drug cartels.

The developers denied that their communities were unsafe, a contention backed by testimony from local officials when the Legislature held special hearings in 2023 in response to outrage and accounts from residents in the developments. Texas Attorney General Ken Paxtonsued the developers soon after, accusing them of deceptive sales, marketing and lending practices in a suit that echoed claims lodged by the federal government in a separate case.

Under the settlement released Tuesday, Colony Ridge’s owners agreed to clamp down on the documentation it requires from buyers. Would-be purchasers will now have to present a Texas ID or driver’s license — which undocumented immigrants cannot obtain in Texas — or a passport or visa. The agreement did not specify that the passport has to be an American one.

The agreement resolves the state and federal lawsuits, which alleged the owners of Colony Ridge lured would-be Spanish-speaking homebuyers into seller-financed mortgages with high interests that they could not afford. By federal authorities’ estimate, roughly one in four Colony Ridge loans resulted in foreclosure. The company would then flip those properties to new unsuspecting customers eager to become homeowners, court filings allege.

The federal case, filed by the Biden administration’s Justice Department in late 2023, also accused Colony Ridge of misrepresenting facts such as guarantees of water, electricity and sewer hook-ups and whether properties had previously flooded.

The settlement seeks to address those accusations. Colony Ridge agreed to:

1. Pause seeking approvals for any new residential plats for three years.

2. Establish new criteria for approving loans and offer relief to customers facing foreclosure.

3. Ensure that its advertising and marketing is truthful.

4. Spend $48 million on infrastructure projects like roads and drainage systems.

5. Offer discounts to peace officers in an effort to encourage them to live in the development.

6. Earmark $20 million for law enforcement, including the construction of a new police station within the community and money specifically for immigration enforcement.

Spokespeople for Colony Ridge did not immediately respond to requests for comment.

In a statement, Paxton said the settlement had resulted in Colony Ridge’s owners paying “a steep cost for their unlawful actions.”

“My office will continue to bring the full force of the law against anyone who threatens the safety of our state or creates a safe harbor for illegals,” Paxton said.

Harmeet K. Dhillon, who oversees the Justice Department’s civil rights division, in a statement celebrated the settlement as a victory against discrimination — and the promotion of illegal immigration.

“Intentionally targeting vulnerable borrowers with the American dream of homeownership and then trapping them in a predatory scheme is not only wrong, it also violates our civil rights laws,” Dhillon said. “This DOJ will go after all lenders, financiers, and land developers who participate in schemes which ultimately encourage illegal immigration.”

The agreement appeared to please both immigration hardliners and those who had advocated on behalf of residents for years, raising alarms about the development even before it became a conservative lightning rod.

Michael Quinn Sullivan, publisher of the right-wing Texas Scorecard, which helped draw conservatives’ attention, said that the settlement “functionally means Colony Ridge is no longer a safe haven for illegal aliens.” He called it a “huge win on a major issue” for Paxton — currently in a heated GOP primary for U.S. Senate — and Dhillon.

SuEllen Sanchez, who with her sister had filed complaints with state agencies about Colony Ridge years ago, struck an optimistic tone in a social media post.

“They won’t be able to scam more immigrants,” Sanchez said. “My heart is with them right now.”

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This story was originally published by The Texas Tribune and distributed through a partnership with The Associated Press.