Lending & Foreclosure
Verified Update
Pending
A federal magistrate judge faulted a Nord Group unit for collecting rent on the 228-unit Edgewater Apartments in Lake Jackson, Texas after Freddie Mac foreclosed, then suing its lender instead of turning it over.
Trade press reported October 15, 2026 that U.S. Magistrate Judge Andrew M. Edison called it "pretty damn egregious" that a Nord Group subsidiary kept collecting rent on Edgewater Apartments, a 228-unit Lake Jackson, Texas complex, after Freddie Mac had already foreclosed on the property, and then sued its own lender over the dispute rather than turning over the proceeds. The report describes a broader pattern across Nord Group's multifamily portfolio of lenders and investors accusing Nord entities of diverting rents, submitting falsified insurance records, and letting buildings deteriorate, with court filings describing sewage backups, mold, and vermin at some properties.
Undisclosed loan balance; part of a broader multi-property Nord Group portfolio collapse
Why it matters: The case illustrates how a borrower's continued control over a foreclosed asset's cash flow, and an offensive lawsuit against the foreclosing lender, can expose a distressed sponsor to conversion and unjust-enrichment claims well beyond an ordinary loan default, while allegations of falsified insurance certifications can independently trigger recourse carve-outs in a non-recourse loan. Lenders and special servicers holding 2021-2022 vintage multifamily loans should treat the matter as a reminder to secure receivership and audit borrower-reported insurance and property conditions promptly once a maturity default occurs.
Oct 15, 2026
U.S. District Court, Southern District of Texas (Galveston Division)
Lending & Foreclosure
Verified Update
Pending
Fannie Mae and Freddie Mac's servicer Walker & Dunlop have sued entities tied to Chicago investor Chaim Bialostozky, alleging inflated property values on roughly $44 million of defaulted apartment loans across Illinois, Oklahoma and Connecticut.
Fannie Mae and Freddie Mac's loan servicer Walker & Dunlop have filed a widening series of foreclosure and fraud suits since June 2026 against multifamily portfolio entities tied to Chicago-area investor Chaim Bialostozky, alleging the underlying loans were obtained by inflating property values through same-day, back-to-back property sales. As of a September 22, 2026 report, the suits cover roughly $44 million in loans now in default or foreclosure across Cook County, Illinois, Tulsa County, Oklahoma, and Waterbury, Connecticut, with court records showing no appearance or response filed by the borrower entities in any of the pending actions.
Roughly $44 million in Fannie Mae- and Freddie Mac-backed multifamily loans now in default or foreclosure across Illinois, Oklahoma and Connecticut
Multifamily
Why it matters: The case illustrates how federal-agency lenders are increasingly pursuing a coordinated, multi-jurisdiction fraud theory against multifamily investors who scaled quickly on agency debt, rather than treating each defaulted loan as an isolated workout -- alleging a common scheme of inflated valuations across an entire portfolio, which exposes borrowers to receivership and liability well beyond any single property's collateral value. Multifamily owners who financed rapid acquisitions with Fannie Mae or Freddie Mac debt should expect that a default on one property can now trigger lender scrutiny, and parallel litigation, across every other agency-financed asset the same principal controls.
Sep 22, 2026
Circuit Court of Cook County, Illinois, Chancery Division (with related foreclosure suits pending in Oklahoma and Connecticut state courts)
