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

Lending & Foreclosure Pending
Date
September 22, 2026
Added to tracker
November 1, 2026
Court or forum
Circuit Court of Cook County, Illinois, Chancery Division (with related foreclosure suits pending in Oklahoma and Connecticut state courts)
State
Illinois
Property type
Multifamily
Amount / scale
Roughly $44 million in Fannie Mae- and Freddie Mac-backed multifamily loans now in default or foreclosure across Illinois, Oklahoma and Connecticut
Parties
Plaintiff/Lender: Federal National Mortgage Association (Fannie Mae)Loan Servicer for Freddie Mac / Plaintiff: Walker & Dunlop, Inc.Original Lender: Arbor Realty Trust, Inc.

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.

Original source ↗
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A Chicago-area multifamily investor's rapid, agency-debt-fueled acquisition spree has collapsed into a widening web of foreclosure and fraud litigation spanning three states. Since June 2026, Fannie Mae and Freddie Mac's loan servicer, Walker & Dunlop, have filed a series of suits against portfolio entities tied to investor Chaim Bialostozky, alleging that he obtained inflated government-backed loans by artificially driving up purchase prices through same-day, back-to-back property sales -- buying buildings and reselling them to his own entities, on paper, at a markup, before using the inflated sale price to justify a larger loan.

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CREdocket summarizes public court records and reporting; see our sourcing standards and corrections log. Not legal advice. Facing something similar? Contact us.