Freddie Mac is getting called out for its management — or alleged lack thereof — at a Kenwood rental complex that was seized last year from previous owners tied to a federal real estate fraud investigation.
Tenants of the 105-unit Ellis Lakeview building at 4624 South Ellis Avenue sued Freddie and its property manager, Chicago-based Ansonia Management, earlier this month, claiming they’re retaliating against the renters with unlawful evictions.
Freddie took control of the property from an LLC tied to Boruch “Barry” Drillman, Chaim Puretz and Oron Zarum, who have since been blacklisted from doing business with Freddie’s sister agency, Fannie Mae. Drillman and Puretz have been convicted in a federal criminal mortgage fraud investigation.
With the scammers in control of the property, the tenants faced problems even before Freddie entered the picture. Renters pressed Freddie to take control of the building, citing the previous ownership’s mismanagement.
But now the renters say things haven’t improved much since Freddie went through with foreclosure and became their new landlord. Fourteen tenants filed suit against Freddie and Ansonia claiming that roaches and mice are frequently visible in hallways and that there are “building-wide infestations” that haven’t been addressed. Elevators are also constantly out of order, and heating systems frequently malfunction and make for cold nights, among other problems that persist at the property, the suit says.
Freddie declined to comment through a spokesperson, citing a policy not to discuss pending litigation. Ansonia didn’t return a request for comment.
The tenants began to withhold portions of their rent due to the failure of the building owner to comply with Chicago’s Residential Landlord Tenant Ordinance. The rule provides tenants a process they may follow when their rentals aren’t kept up to local standards. But there’s tenants facing eviction now after withholding some of their rent due to the continued problems; they were served lease termination notices this spring. Fifteen have requested an injunction to fight against the eviction attempts, claiming they jumped through all the right hoops to withhold rent and were justified in doing so.
Many of the tenants receive federal subsidies to help cover their costs of rent, through programs administered by the Department of Housing and Urban Development. They allege that Freddie and Ansonia “violated HUD tenant organizing protections when they provided [tenants] termination notices after [tenants] asserted their right to reduce their rent under the RLTO,” the suit states. Attorney Peter Luck of nonprofit Beyond Legal Aid is representing the tenants.
Tenants have claimed some victories at the property, such as repairs to hot water systems and roof repairs, as well as around-the-clock on-site security staff. But they’re pushing for an agreement with Freddie that it will make any new owner of Ellis Lakeview sign a contract that allows the residents to help set terms of the building’s rehabilitation, security and some management practices. They’re pointing out that the security staff could be easily dismissed in the future.
Freddie is seeking a new owner for the property. The price it might fetch is unclear after Freddie paid $12.4 million using a credit bid at a foreclosure auction, after litigating the Puretz and Drillman venture’s loan default.
“We worked too long, too hard and we’ve been through too much to just go through it all again,” Laprena Brown, a tenant leader for the property, said in a statement.
Editor’s note: This story has been updated to clarify the status of the litigation.
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