Banking and Finance Law Daily Wrap Up, ENFORCEMENT ACTIONS—DOJ, Texas and CFPB to dismiss Colony Ridge actions after $68M settlement, (Feb 11, 2026)

By Shashi Kant, BALLB, LL.M.

The settlement agreement requires infrastructure and law-enforcement expenditures and sets compliance terms, with court asked to retain jurisdiction for enforcement.

The U.S. Department of Justice and the State of Texas filed a joint motion asking the U.S. District Court for the Southern District of Texas to dismiss their actions against Colony Ridge entities and individuals pursuant to a settlement agreement executed by the parties. The motion seeks dismissal with prejudice under Federal Rule of Civil Procedure 41(a)(2) and requests that the court retain jurisdiction to enforce the settlement agreement. In a separate filing, the Consumer Financial Protection Bureau and certain defendants submitted a joint stipulation of voluntary dismissal under Rule 41(a)(1)(A)(ii), dismissing the CFPB’s claims with prejudice, with each party bearing its own costs and attorneys’ fees (Consumer Financial Protection Bureau v. Colony Ridge Development, LLC, No. 4:23-cv-04729; State of Texas v. Colony Ridge, Inc., No. 4:24-cv-00941 (S.D. Tex. Feb. 10, 2026)).

Joint motion. The joint motion states that the settlement agreement resolves the claims brought by the United States and Texas in the above-captioned actions and attaches a proposed order of dismissal. The filing represents that the parties have reached a resolution of the claims asserted in the federal and state complaints and seek dismissal consistent with the agreement’s terms.

CFPB stipulation of voluntary dismissal. In a separate filing, the CFPB and certain defendants submitted a joint stipulation of voluntary dismissal. The stipulation states that the CFPB’s claims against the defendants are dismissed with prejudice and that each party will bear its own costs and attorneys’ fees. The stipulation is filed pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). The CFPB stipulation operates independently of the joint motion filed by the United States and the State of Texas and reflects the Bureau’s dismissal of its claims as described in the filing.

Settlement agreement terms. The settlement agreement sets forth specified spending commitments totaling $68 million. The agreement provides that defendants will expend “an aggregate amount of forty-eight million dollars ($48 million)” to “fund the installation and/or repair of water and sewer infrastructure in the Community.” The agreement further provides that defendants will expend “an aggregate amount of twenty million dollars ($20 million)” to “fund law enforcement activities in and around the Community.” The agreement specifies a schedule of “two million dollars ($2 million) per year for ten years” for the law-enforcement funding. The agreement states that the $20 million in law-enforcement funding is “for use at the sole discretion” of the designated law-enforcement recipients. It further states that “no portion” of the $20 million will be used “to provide or further any immigration-related services.”

The settlement agreement contains provisions addressing implementation and administration of the required expenditures. It includes reporting and documentation requirements related to the infrastructure and law-enforcement spending commitments. The agreement also contains compliance-related provisions governing future conduct by defendants, as defined in the agreement’s terms.

Texas Attorney General press release. In a press release, Texas Attorney General Ken Paxton announced what he described as a settlement requiring Colony Ridge developers to pay “$68 million.” The press release characterizes the financial component as “penalties” and states that the agreement includes terms directed at future conduct. The press release states that the resolution addresses alleged conduct involving development and sales in the Colony Ridge area and describes the agreement as securing funding for infrastructure and law-enforcement activities.

Prior allegations. The Consumer Financial Protection Bureau and the Department of Justice filed a complaint in December 2023 alleging a scheme involving land sales and financing practices (see Banking and Finance Law Daily, Jan. 5, 2024). According to the complaint Colony Ridge targeted “primarily Hispanic borrowers” and financed “flood-prone land without water, sewer, or electrical infrastructure,” and the CFPB alleged that roughly “25 percent of Colony Ridge loans end in foreclosure.” A federal magistrate judge subsequently recommended that a motion to dismiss filed by Colony Ridge be denied (see Banking and Finance Law Daily, Oct. 16, 2024).

Attorneys: Elisabeth Assae-Bille for the CFPB. Elizabeth Frances Karpati, U.S. Attorney's Office, for the U.S. Alexander Mark Dvorscak (Stone Hilton PLLC) for Colony Ridge Development, LLC d/b/a Terrenos Houston d/b/a Terrenos Santa Fe d/b/a Lotes y Ranchos, Colony Ridge BV, LLC and Colony Ridge Land, LLC d/b/a Terrenos Houston d/b/a Lotes y Ranchos. Lisa A Paulson (Davis, Gerald & Cremer PC) for Loan Originator Services, LLC

Companies: Colony Ridge Development, LLC d/b/a Terrenos Houston d/b/a Terrenos Santa Fe d/b/a Lotes y Ranchos; Colony Ridge BV, LLC; Colony Ridge Land, LLC d/b/a Terrenos Houston d/b/a Lotes y Ranchos; Loan Originator Services, LLC

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