Fannie Forecloses on Convicted Investor Mark Silber in Chicago

Fannie Mae isn’t done with Moshe Silber.

The mortgage giant is going after pieces of a multifamily portfolio tied to Silber on Chicago’s South and West sides, alleging the disgraced New York-based landlord and affiliates failed to pay off $10 million in loans that came due three years ahead of their scheduled maturity dates.

The maturity dates were accelerated, and Fannie demanded payment in full this summer, because the buildings were allegedly left in disrepair, and the landlord failed to fix them up as required by the city, public records show.

It’s Silber’s latest mixup with Fannie, which has already aided in his criminal prosecution for shadowy real estate dealings. Silber pleaded guilty this summer for his role in a $119 million mortgage fraud scheme that involved duping a lender and Fannie into providing far larger debt packages than they would have if not for fraud.

Meanwhile, as Silber awaits his Jan. 14 sentencing hearing, the once-vast multifamily holdings assembled through his New York-based firm Rhodium Capital and its affiliates appear to be dwindling.

Neither Silber, his attorney nor Rhodium returned requests for comment. An attorney for Fannie didn’t return a request for comment.

Fannie filed two foreclosure lawsuits in Cook County court last week against an LLC registered to Silber and other entities that share a Monsey, New York, address with Silber. They collectively own six multifamily buildings totaling over 150 units in the South Shore, Washington Park and Austin neighborhoods.

The suit alleges the ownership defaulted on the debt vehicles they took out in 2017. The loans were arranged by Arbor Realty Trust affiliates before being sold off to Fannie. Fannie is foreclosing on a $6.7 million loan secured by two buildings at 5248 and 5300 South Martin Luther King Drive in Washington Park, and a third at 7600 South Essex Avenue in South Shore; and a $3.3 million loan tied to 5644 West Washington Boulevard and 114 and 124 North Parkside Avenue, all in the Austin neighborhood of Chicago.

The suit claims the landlord of the properties failed to cure housing court violations as well as building and zoning code violations cited by the city for years. Some of the local court cases against the buildings’ ownership were initiated several years ago and have led to the city requesting a receiver be appointed to take over the operations of the properties.

Furthermore, for the repairs that were made to the properties, the landlords appear to have skipped out on the bill. Contractors have filed six-figure liens against the properties alleging they’ve gone unpaid for their work, with Fannie citing those as another event of default.

Lenders pursuing foreclosure due to lingering building code violations are rare, especially if they’re minor. But in this case, the disrepair impacts the safety of the buildings, according to public records. Plus, there is some recent precedent for government sponsored enterprises initiating foreclosure in a similar situation, and it involves one of groups Silber tangled with during their brazen mortgage fraud scheme.

Freddie Mac this year filed a foreclosure lawsuit against Apex Chicago IL, an entity that owned the Ellis Lakeview Apartments in the South Side’s Kenwood neighborhood and was controlled in part by troubled investors Chaim Puretz and Boruch Drillman, according to previous reports. Puretz has denied connection to the property.

Drillman also pleaded guilty in a mortgage fraud scheme that involved Silber last year. Puretz was charged with one count of corrupt business influence and 12 counts of theft in the Indianapolis area this year for allegedly transferring $1.63 million meant to pay utilities at Indiana apartment complexes into his own bank account, according to WRTV in Indianapolis.