Fannie Mae, Freddie Mac Servicer Accuse Chicago Investor's Portfolio Entities of Multistate Mortgage Fraud
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.
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.
