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LIBERTY — Jolie Lane squints in the sun, trying to read a Google spreadsheet on her iPhone. The 22-year-old is overseeing an auction of hundreds of foreclosed properties.

Standing at the top of the steps on the south side of the Liberty County courthouse, Lane rarely has an audience, and today is no exception.

Lane, however, is not just playing auctioneer on this Tuesday morning in November. She’s also playing bidder. The only bidder, in fact.

Lane is one of five people authorized to hold sales and bid on properties on behalf of Colony Ridge, the largest developer in Liberty County. She rattles off hundreds of legal descriptions with ease. 

“I, Jolie Lane, bid on behalf of Colony Ridge,” she says. “If there are no further bids, going once, going twice, sold … to Colony Ridge Land.”

In the last decade, tens of thousands of Latino residents in search of the American Dream have moved to Colony Ridge – a Liberty County development that spans 33,000 acres and has become a punching bag for some Texas Republicans. But that dream of homeownership has become an increasingly difficult reality for many of them.

A Houston Landing investigation found the developer reacquired 45 percent of the 35,000-plus properties it has sold since 2012. A Landing analysis of county records found residents returned 15,759 properties to Colony Ridge over the last decade, reflecting how thousands of people have had their dreams of homeownership stripped away from them.

Richard Brown, the county’s tax assessor, said it’s in developers’ financial interest to expand and control the growth of their development. But the rate at which Colony Ridge reclaims and resells land alarms the longtime official. 

“This is not unique to Colony Ridge, but the scale is phenomenal,” he said.

Some of the properties Colony Ridge sold over the last decade have had as many as nine different owners, according to the Landing’s analysis of property records.

Lane ultimately purchased 311 properties on behalf of Colony Ridge in November, just like the hundreds she and various representatives purchased on the first Tuesday of every month this year. All were once owned and sold by the company. 

It’s common for developers like Colony Ridge, especially those that offer loans in-house, to buy back their foreclosed properties at auction, real estate experts say. But to Brown, holding a public auction should be a last resort.

“I mean, it’s just a set of revolving doors,” he said, referring to the high number of properties Colony Ridge purchases each month.

Colony Ridge is structured in a way where one branch of the company, Colony Ridge Development LLC, sells properties. Another branch, Colony Ridge Land LLC, buys back properties the company forecloses on.

The company’s chief financial officer, Craig Parker, argues the 45 percent turnover rate is heavily skewed because it includes “deeds in lieu of foreclosures,” a legal document used by Colony Ridge to transfer property back to the company when someone who hasn’t paid off their loan wants to sell.

Colony Ridge also reacquires properties at foreclosure auctions, such as the one Lane oversaw in November.

In an interview, Parker said that the company’s overall foreclosure rate in 2022 was 11.31 percent of its holdings. However, that rate is about 50 times higher than last year’s national average, which was 0.23 percent, according to the data analytics firm Statista.

“When I hear a high foreclosure rate, they’re not in the business of lending money,” said Ronald Rohde, a Dallas real estate attorney who operates his own firm. “They’re in the business of foreclosure so they can take the asset back and recycle it.”

A vulnerable population

Carlos Mauricio Jarquin dreamed of a calm life in America. 

One without the threat of brutal gangs like those in San Pedro Sula, a city in northwest Honduras, where he was charged an ever-increasing “safety fee” to keep his carpentry business open.

So he left home for Houston 13 years ago.

Jarquin was drawn to Colony Ridge because it offered him the chance to continue to build his business in a quiet, rural area. While living in northeast Houston and working in the hospitality industry, he would see commercials for the housing development on TV.

In January 2018, Jarquin put down $750 and agreed to Colony Ridge’s standard 12.9 percent interest rate to pay off a $41,400 loan for property in the development’s Bella Vista subdivision, according to copies of his real estate contracts and his loan agreement viewed by the Landing. 

Despite knowing the interest rate was likely higher than what others outside the development would be offered, Jarquin plowed ahead. Between payments, transportation to and from Houston, and the improvement he made to his property, Jarquin poured up to $40,000 into his dream.

He kept current on his mortgage and property taxes, installed a drainage system and driveway, and even added a trailer in 2019, where he intended to live.

“Everything was perfect,” Jarquin said in Spanish. But an unexpected hardship befell the Honduran in June 2020.

While on a lunch break from serving food at the Lake Conroe Margaritaville resort, Jarquin broke his leg. He had been leaning against the back of his truck when the tailgate swung open and the force of the door took him to the ground.

Unable to walk, he lost his job, and the ability to build furniture on contract or pick up shifts at the local Home Depot.

The 65-year-old began falling behind on payments on his property and took out two personal finance loans totaling nearly $15,000 to pay Colony Ridge.

“Luché y luché … I fought and I fought,” he said. “It was my leg or my property.”

The road to recovery was costly and included a year of physical therapy. Jarquin sent letters to Colony Ridge explaining the accident and requested forbearance, or an extension on the due date for his payments. At the time, during the height of the pandemic, homeowners with federally backed loans could pause or reduce mortgage payments up to six months, according to the Consumer Financial Protection Bureau. 

But Jarquin said Colony Ridge officials told him that he would need to find a buyer for his property or they would be forced to foreclose on him and report his failure to make payments to credit bureaus.

“I was suffering all the time,” Jarquin said. “Economically, I had nothing. I knocked on a bunch of doors and none of them opened.”

John Harris, president and CEO of Colony Ridge, said he couldn’t speak to every former resident’s experience, but that the company is flexible with payment plans.

“I need to treat everyone the same,” Harris said. “But every month we have foreclosures. And every month, there are at least one or two that come back to my desk. And it’s just a loss-mitigation application, where the customer calls and says, ‘No one told me,’ … they’re just trying to save their home … and we help them.”

Harris said the majority of his customers are Latino. About 38,000 Latinos call Liberty County home, representing approximately 37 percent of the county’s population, according to U.S. Census reports from 2022. That’s about 10,000 more Latino residents than were recorded in 2010.

But county officials believe the figures are an undercount. Local law enforcement believe many of Colony Ridge’s residents are here illegally and have been reluctant to participate in Census Bureau surveys.

Colony Ridge heavily markets to the Spanish-speaking community. Signs in highlighter yellow and firetruck red promise easy access to homeownership: ¿No crédito? ¡No problema!

Non-U.S. Citizens can apply for home loans with a U.S. individual tax identification number, or ITIN. But the likelihood of getting ITIN loans from a traditional lending institution like a bank becomes more difficult when potential borrowers do not meet certain requirements like a documented employment history, credit history or proof of income.

Harris, who runs Colony Ridge with his younger brother William “Trey” Harris and cousin Kevin Harris, said the company has no minimum requirements to obtain a loan. All buyers have to do is come up with at least $500 for a down payment and agree to the 12.9 percent interest rate, which is twice as high as the current national average for a lot loan offered by a traditional lending institution like a bank or credit union.

Having no minimum requirements is the only way, John Harris said, for Colony Ridge to offer the most opportunity to the most people.

“We wish they would all just pay. But there are so many people that don’t seem like they can afford it,” he added. “You really can’t judge by someone walking in.”

Rex Mann, a real estate attorney in Houston, wonders what motivates Colony Ridge.

“Are they lending to people they anticipate will eventually get broken by this? If the calculation and the intention is to do that, then that’s not allowed. That’s a problem,” he said, referring to federal consumer protection laws like T-Safe and Dodd-Frank.

Those protections require a lender to make “a reasonable and good faith determination … that the consumer will have a reasonable ability to repay the loan according to its terms.”

The 45 percent turnover rate in Colony Ridge represents each time the company repossessed properties through foreclosure after residents defaulted on their loans or when residents wanted to transfer their property to a new buyer. When the latter happens, Colony Ridge issues a deed in lieu of foreclosure.

When a borrower agrees to a deed in lieu of foreclosure, they return the property to the lender and avoid a lengthy, costly foreclosure. The new owner then assumes the property’s promissory note, or promise to pay the lender what is owed.

But a deed in lieu is still a form of borrower default, said Rohde, the Dallas real estate attorney.

“(A company) will send a default notice and say, ‘Hey, we’ll accept a deed in lieu instead of you paying $66,000 in cash within 15 days,’ which they don’t have or they don’t want to pay it,” Rohde said. 

Unable to make his payments, Jarquin transferred his property in October 2020 to Zelaya Maria Argentina Barahona, a woman he met through work, who did not respond to calls requesting comment. 

Jarquin was not the original owner of his lot. In total, Colony Ridge reacquired and resold that property four times since the first owner signed a deed in February 2013, according to county records.

“They told me that if I didn’t transfer it voluntarily, they would sue me, and it would be more expensive,” Jarquin said.

Colony Ridge attracts fear mongering

Until September, Colony Ridge, located about 40 miles northeast of Houston, was not on most Texans’ radar. But over the past few months, the development has become the focus of alarmist talking points among Texas state legislators, especially conservative politicians.

One point of contention is just how many people live across Colony Ridge’s six subdivisions. Estimates range from 40,000 to 100,000, depending on who you ask, but there is no clear answer.

John Harris says the population is less than 50,000, but Liberty County Sheriff’s Office officials argue the number is closer to 75,000, and likely even higher.

In late September, Gov. Greg Abbott appeared as a guest on conservative talk radio host Dana Loesch’s show and said he was concerned about crime and cartel activity making Colony Ridge a “no-go zone” for law enforcement — a claim the local sheriff’s office has denied.

Some state officials labeled Colony Ridge a crime-ridden, “illegal alien settlement,” and correlated the development with the influx of immigration at the U.S. southern border.

Those concerns were largely debunked after Abbott added Colony Ridge as an agenda item in the Legislature’s special session in October and lawmakers distinguished sensational, right-wing media reports from county officials’ testimony. 

On Oct. 31, a representative for Attorney General Ken Paxton’s office testified during the special session that Paxton was investigating the company’s “misrepresentation to consumers,” “abusive lending practices” and “whether Colony Ridge is giving rise to public nuisance,” but wouldn’t elaborate further.

The governor called for another special session on Nov. 7, asking the Legislature to grant the Department of Public Safety more funding to patrol Colony Ridge. As a result, lawmakers passed Senate Bill 3, which allocates $40 million out of a $1.5 billion investment in state border security for increased DPS patrols in Colony Ridge, despite a lack of documented crime.

However, no further legislative scrutiny has extended to how Colony Ridge structures its owner-financed loans and reacquires the properties it sells. 

New homeowners struggle with high interest rate

At his lowest moments, Jarquin struggles to understand how he managed to endure breaking his leg, surviving COVID-19 without work, and losing his property in Colony Ridge all in the span of one year.

“To be honest,” he recalled feeling, “I am alone in a desert.”

Jarquin laments the loss of his dream to build a carpentry business in the U.S.; he sold off most of his tools to repay his debts. Since the accident, he can work no more than eight hours a day at the Margaritaville resort every few days.

“I don’t know why I lived,” he said in Spanish. “It might have been better if I had died but who knows? God knows what He’s doing.”

Now Jarquin lives in an apartment in Greenspoint with his partner, a woman he says he hopes to marry someday when he is in a better financial position. He still struggles to understand where all of his money went.

In addition to Jarquin, several current and former Colony Ridge residents the Landing spoke with said they felt that they understood how much they would be paying in interest for their lots, but only realized later on that they were not in a position to do so. 

One of those current residents, a Cuban-American woman living in Colony Ridge’s Santa Fe subdivision, said the prospect of losing her home terrifies her. 

In March 2021, the 45-year-old woman – who asked not to be named for fear of retribution – purchased her lot with the help of a $62,000 loan from the lending arm of Colony Ridge. She put down $500 and began making regular payments. But after six months, she realized that less than $350 of the $4,000-plus she had paid had gone toward the loan’s original amount.

To achieve her dream of homeownership, the Sante Fe resident will have to spend more than $172,000 over the next 18 years, about three times what she originally borrowed.

“They only talked to me about the (interest) percent — not what it actually meant,” the woman said in Spanish. “They said, ‘It’s so easy, if you pay in enough time, you will be a homeowner.’”

As someone with poor credit, trying to support her two children, mother and partner, she said she was taken aback by how much a 12.9 percent interest rate would limit her ability to make ends meet while owning land.

Most loan agreements — whether offered by private lenders or banks — are structured in a way where the majority of monthly payments go toward interest at the beginning of the loan period. It is a way to limit the lender’s risk, said Mann, the Houston real estate attorney, who reviewed a copy of the resident’s financial documents at the Landing’s request. 

He said that a 12.9 percent interest rate can be considered high when compared to the 7 percent national average for a 30-year fixed mortgage. However, a lender like Colony Ridge takes on more risk than traditional lending institutions do by offering loans to customers with little to no credit history, he added.

Parker, the development’s CFO, said Colony Ridge has robust customer service for buyers and residents who have questions concerning their paperwork. He also said it’s company policy for translators to be present at every closing. 

“Our incentives have aligned with each other where the better we can take care of our customer, the better it is for the company,” Parker said.

Before the current Santa Fe resident bought her lot, county records show Colony Ridge sold, reacquired and re-sold the property to two other people.

One of them, Emiliano Roque, said his experience with Colony Ridge was so bad he threw out all of his old contracts.

“Ever since I had to return my property, I want nothing to do with the company,” he said in Spanish.

Roque moved to Texas in 2020 from Minnesota and learned about Colony Ridge from a friend who suggested moving there was a good option. He said he paid $500 as a down payment for the lot in late April 2020. But after making the initial $500 deposit, Roque lost his job and couldn’t keep up with his monthly payments in May or June. 

He said he asked Colony Ridge if his payment plan could be adjusted, but the developer refused. Roque defaulted on the property on June 16, 2020, and the company re-sold the land to another buyer just two weeks later on July 2, county records show.

What happens after a resident defaults?

On the first Tuesday of every month, Liberty County officials hold a public auction outside the county courthouse between 10 a.m. and 1 p.m. — as required by state law — on all properties district courts have declared delinquent for unpaid property taxes.

Separate auctions, known as trustee sales, are also held for non-judicial foreclosures. 

In November, Lane, the Colony Ridge representative, bought back 311 properties the company foreclosed on in October.

“I’ve never had someone come up and bid. I think you guys are my first audience,” she told two Houston Landing reporters.

Her father, Robin Lane, is a cousin of Colony Ridge owners John and Trey Harris, and the main foreclosure agent and trustee who manages the sale of delinquent properties on the developer’s behalf. The Harrises employ Robin; his wife, Lesley; Jolie and two other agents in order to bid on and repurchase the recently foreclosed lots.

Parker said Colony Ridge welcomes other bidders, adding, “we will absolutely sell it to the highest bidder.”

But John Harris acknowledged his company doesn’t want other companies to buy up lots in the development. “We don’t want a lot of other investors in the neighborhood because it hurts our reputation if they’re not good to our customers,” he said.

Brown, the county’s assessor, added that all of Colony Ridge’s property taxes are collected and paid for.

If a resident of the development is behind on their taxes, Colony Ridge warns them they will need to set up a 12-month payment plan with the county or face foreclosure, according to a notice obtained by the Landing.

“Please be aware if Colony Ridge pays your delinquent taxes, we could start the foreclosure process against you for failure to pay your property taxes as established in your Deed of Trust,” the development’s tax department said in a letter to a business owner in the Camino Real subdivision.

However, the county’s payment plan can cost residents up to 35 percent in interest on their unpaid balance over a year, Brown said. That’s because the county hires a tax lien investor to front the unpaid taxes, he added.

John Harris and Parker confirmed Colony Ridge covers all residents’ delinquent taxes, but also offers residents 120 days to pay back what they owe at a zero percent interest rate, before the company starts the foreclosure process.

Brown pointed out that Colony Ridge does not offer escrow — a common tool traditional lenders include as an option to borrowers. An escrow account holds onto a portion of a borrower’s monthly mortgage payment to save for that year’s property taxes and any insurance they have. 

“I’ve encouraged the Harrises to offer escrow,” Brown said. “If you’re gonna act like a bank, act like a mortgage lender and a chief financial officer, it’d be a good mechanism to have.”

John Harris said the company cannot afford to offer escrow because the value of the lots they sell increases at unpredictable rates — meaning residents’ monthly payments would also increase unpredictably. 

“If someone builds a house and our lending department doesn’t get notice of it, then they don’t adjust the escrow correctly,” Harris said. “And by the time they do adjust it, it’s going to cause such a big jump in the monthly payment.”

He added that most of Colony Ridge’s residents can manage a lump sum at the end of the year.

“The concern (with escrow) is that it’s a lot of work,” Harris said. “And if we don’t do it perfectly it is going to cause even more headache for the customer.”

Not everyone loses their property

Some buyers have successfully paid off their loans with Colony Ridge.

Pastor Timoteo Tarango and his wife, Melida Tarango, purchased three adjacent lots in 2015 with a plan to develop and eventually sell them. They owned a home that had been paid off and a business in Houston, and the couple were looking for investment opportunities. 

They borrowed $77,700 for the three lots at the 12.9 percent interest rate and made a $4,000 down payment. The Tarangos were expected to pay about $132,000 over 10 years. 

Timoteo Tarango said the high interest rate did not surprise him, considering it was not attached to a traditional loan. But from the start, he and his wife opted to pay extra each month to avoid as much interest as possible. 

“If you finance anything, you are going to pay a lot more,” the pastor said. “I think everyone has at least a little bit of an understanding about financing. Why? Because we are used to financing everything. Credit card interest is even worse.” 

Harris said he walks a tightrope between offering residents like the Tarangos ample opportunity and lowering the company’s borrowing standards.

“Everyone has to balance this as a lender,” he said. “If you want to give more people opportunity, then you lower your lending standards, but you lose more of those customers because they don’t pay for the property.”

Parker, the CFO, said 90 percent of the company’s foreclosures, based on internal data, are for undeveloped lots that families do not live on.

“The frustrating thing for us is we believe we’re losing those (lots), because people walk away from dreams, right?” Parker said. “When you buy a lot, you still have your bills, you still have your home, your car, all the things. And so when times get tough — I don’t care if you’re a poor Hispanic from Houston or if you’re a rich white guy from Maryland — you sacrifice those dreams to make sure that your kids have a place to sleep at night.”

Parker added that his experience at commercial banks taught him that interest rates and foreclosure rates are higher on lot loans, because when money is tight, people walk away from undeveloped property.

The Tarangos paid off their loan in about seven years, cutting the payment plan short by about 36 months. They decided to keep their lots and build a home on one of them, where they live now. They are constructing a church next door. Plans for the third lot are still up in the air, but the pastor thinks it could serve as a recreational space for youth who attend the church. 

“When you buy a house, you are normally going through a bank,” the pastor said. “But when you buy lots like here, in reality it’s harder for a bank to finance it. So that’s why you need to give all of the extra money you might have to pay it off sooner.”

Developers say turnover is due to deeds in lieu

John Harris said Colony Ridge’s high turnover rate is a result of the company’s practice of taking ownership of land that residents want to sell but haven’t paid off. 

During this process, Colony Ridge issues a deed in lieu of foreclosure, transferring the title of the property from its current owner back to the company. The company then sells the property to a new buyer, who continues paying off the original loan.

That’s how Art Medina and Kim Phipps found their home. According to Medina, a seller named Vanessa Salma listed a lot in section three of the Santa Fe subdivision on Facebook Marketplace, asking buyers to pay her $7,500 to take over her mortgage. 

In return, Salma transferred her property back to Colony Ridge for an undisclosed amount and Medina and Phipps assumed her $39,000 loan.

The roundabout process was cheaper than buying land outright from Colony Ridge, Medina and Phipps said. Going through the company would have cost them closer to $50,000 – a 20 percent increase from the original value of the land, county records show.

“She was trying to get some of the money she had already invested into the property back,” Medina said, referring to Salma. “And then, we took over the remaining balance.” Salma did not respond to the Landing’s voicemails or text messages.

Medina said he and Phipps paid Salma $4,000, but still owe her $1,100. Property records show Salma and her husband paid Colony Ridge $10 in June of last year to release them from the liability of their loan.

Harris said the $10 fee is standard and protects the privacy of the transaction. When Colony Ridge accepts these deeds in lieu, the company either forgives an unpaid balance or comes to an agreement with the seller.

Harris said his company follows the law and reimburses equity residents have invested in their property.

Brown, the county’s tax assessor, advises against buying property through unconventional methods  like Facebook.

Harris maintains that Colony Ridge reserves the right to halt transfers between residents and outside buyers. He said borrowers abused the practice and were trying to make a profit off prospective new buyers.

“They were taking advantage of it,” Harris added, “and that’s why we’ve kind of backed off (from allowing title transfers).”

Not a long-term strategy for success

Liberty County Judge Jay Knight, the county’s top official, said Colony Ridge’s high turnover rate is indicative of total power Texas developers wield.

“This (doesn’t) just happen in Colony Ridge … or northwestern Liberty County,” he said. “This is gonna happen everywhere. This is a business model established by a developer and it works for him. We have to look at how you can make it better.”

Knight has sympathy for residents who borrow from the developer, speculating that many do not fully understand the documents they sign. 

“Let’s look at the reality here,” Knight said. “Did you read the entire contract? If these folks want a better way of life, they say, ‘Contract be damned, I’m gonna sign and get it. By golly, me, mama and the kids are moving.’”

The county judge wishes he had more legal authority to monitor private lenders’ contracts and Colony Ridge, which is located in unincorporated Liberty County. “County government is limited in their ability to govern developers, period,” he said.

The state Legislature could amend the Texas Constitution’s Chapter 232 laws, which govern counties’ ability to regulate subdivisions. But Knight said he believes the political blowback of such a change would outweigh any benefit.

“The toughest part of it … and I even mentioned this in the special session hearing, if you start changing 232 laws, you’re gonna have every lobbyist breathing down your neck,” Knight said. “Every architect, engineer, associated general contractor, Home Depot, Lowe’s, McCoy’s (Building Supply) … they have lobbyists that hang out at the state capitol and these guys contribute to campaign funds for these representatives.”

Steven Craig, an urban economist at the University of Houston who studies how land is developed, said the number of properties that end up back in Colony Ridge’s hands strikes him as unusual. 

Developers want their land to be developed, Craig explained. Selling vacant properties, and then reacquiring and reselling them is not a long-term strategy for success, he said.

“The fact that the developer is ending up with the land says that they somehow have in mind something in the longer run,” Craig said. “If they were just trying to make the $500 on as many people as they could and just walk away … that would be more typical of an operation that wasn’t really in it to develop the land.”

Harris said his company’s practice of offering land to buyers with little to no credit history creates opportunities where there are none.

“We always wish we could help more,” Harris added. “All we can do is just give them the opportunity and then trust that they can make those decisions for themselves. That’s essentially what we do. That’s our policy.”

The CEO added that the political rhetoric that has engulfed Colony Ridge the past three months ignores everything the company does to provide services to the development, including a property owners’ association for each subdivision and a central office in New Caney.

“I really want to grow because the people (here) are inspirational to me,” he said. “You see people making sacrifices, living in a tiny little RV, building a house with their own hands because they can’t get financing for the house, but we can get them the property.”

On a Monday evening in December, Carlos Jarquin reflected on the opportunity that Harris and Colony Ridge gave him. Standing in a park across from his Greenspoint apartment, the Honduran immigrant said that his sacrifices have amounted to nothing.

“I invested over $40,000 there,” he said. “I have no benefits. I’m still paying for two loans (I took out) … that went to the property.”

Not only has Jarquin lost his dream — of homeownership, of his carpentry business and a quiet life — but he second guesses whether moving to the U.S. was worth all of the pain it has caused him.

“No one can ever repay me,” Jarquin said.

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