DOJ, Colony Ridge Strike $68M Deal Without Judge’s OK
The DOJ finalized a $68M settlement with Colony Ridge, sidestepping court approval under administrative procedures.
Why it matters: This deal highlights the DOJ's ability to use 28 C.F.R. § 50.7 to enforce settlements without judicial review. Legal teams must reassess exposure and compliance processes when government agencies bypass traditional court oversight in enforcement matters.
- Colony Ridge pays $68M to resolve allegations of predatory lending, primarily targeting Hispanic buyers.
- Judge Alfred Bennett objected to the lack of victim restitution and non-lending related allocations.
- Settlement directs $48M to infrastructure and $20M to law enforcement, not direct compensation.
- The DOJ used 28 C.F.R. § 50.7 to implement the settlement without a judge's sign-off, raising governance questions.
The U.S. Department of Justice has finalized a $68 million settlement with Colony Ridge Development LLC, resolving claims that it steered Hispanic homebuyers toward high-risk, high-interest loans for flood-prone land in Texas. The settlement proceeds without the sign-off of U.S. District Judge Alfred H. Bennett, who raised concerns over the unusual nature of the agreement.
- The DOJ leveraged its authority under 28 C.F.R. § 50.7, which allows the Department to settle and enforce certain civil actions administratively, bypassing judicial review.
- Judge Bennett objected that none of the $68 million would compensate alleged defrauded buyers directly; $48 million will fund infrastructure, and $20 million will support law enforcement and immigration operations—provisions Bennett and outside legal experts described as disconnected from the core lending allegations (ProPublica).
- Colony Ridge must implement tougher lending practices and halt new home development for three years, part of enforceable injunctive relief meant to address alleged predatory tactics.
- Elena Babinecz, former DOJ fair lending investigator, joined others in calling out the lack of direct compensation for homeowners. She told the Texas Tribune it “is a slap in the face to the individuals that were harmed.”
For corporate counsel and compliance leads, this case sets a precedent: government settlements may rely more often on administrative enforcement tools like § 50.7. That can limit judicial scrutiny and narrow opportunities to advocate for client interests in court—as illustrated by robust objections in this matter.
Additional analysis by the American Bar Association outlines how DOJ settlement authority is evolving and the implications for legal strategy in future enforcement actions.
By the numbers:
- $68M — total settlement amount agreed to by Colony Ridge and the DOJ.
- $48M — amount allocated to infrastructure improvements, not direct restitution.
- 3 years — moratorium on new home development by Colony Ridge in the agreement.
Yes, but: The settlement does not provide restitution to defrauded buyers, drawing criticism from judges and advocates.
What's next: Legal teams are monitoring DOJ use of 28 C.F.R. § 50.7 for future enforcement actions; further regulatory scrutiny is expected if administrative settlements continue.