CFPB, DOJ sue developer over predatory lending
On December 20, the CFPB and the DOJ issued a press release announcing the filing of a complaint against four affiliated Texas-based entities (collectively, the “developer”) alleging bait-and-switch land sales and predatory financing. The agencies claim the developer violated ECOA and FHA by targeting thousands of Spanish-speaking borrowers with predatory seller financing. The complaint also alleges the developer misrepresented or omitted material information regarding the seller-financed flood-prone lots having “the infrastructure necessary to connect water, sewer, and electrical services pre-installed,” and regarding flood risk. The complaint also claims that the developer did not provide purchasers with a property report before the purchaser entered into the subject agreement. Further, according to the complaint, the developer marketed the lots primarily in Spanish, but required borrowers to sign important transactional documents written in English only. The action also includes claims brought under other laws and regulations. Notably, this is the first federal court lawsuit the CFPB has brought under the Interstate Land Sales Full Disclosure Act of 1968 (ILSA).