Midland Foreclosing on Troubled Loop Landlord Versity’s Site

The unraveling of a student housing empire formerly known as Versity Investments reached a new low this week with a foreclosure filing against the company’s venture that owns The Buckingham, a tower in Chicago’s Loop.

Wells Fargo, in conjunction with Overland Park, Kansas-based Midland, the PNC Bank-owned special servicer for securitized commercial real estate debt, filed a foreclosure complaint in Cook County court on Monday against affiliates of Mission Viejo, California-based Versity that own the 20-story, 440-unit property at 59 East Van Buren Street.

The lawsuit alleges the landlord defaulted for the second time on a $45.3 million loan originated in 2018. As of late last year, the total indebtedness had swelled to $45.7 million, including over $1 million in accrued interest and default fees, the lawsuit shows.

The filing highlights operational decline. Financial records show that between December 2024 and June 2025, The Buckingham’s occupancy plummeted from 94 percent to 79 percent, while net operating income fell from $4.1 million to $3.8 million. Despite this, loan servicer commentary from late January suggests a flicker of hope for the borrower. According to the notes, the lender is exploring “multiple resolution strategies,” including potential loan reinstatement. The borrower has reportedly indicated a desire to bring the loan current, claiming the collateral’s performance remains “sufficient to cover debt service,” the commentary states.

However, the path to reinstatement remains steep. The loan is currently under an activated cash sweep, meaning the lender has taken control of the revenue the property generates because of the risk of loss. To avoid foreclosure, the borrower will be required to pay all money due to the lender.

Allegedly unpaid investors

Versity’s Chicago distress is symptomatic of broader legal risks facing the firm, its investors, its principal Brian Nelson and former principals Blake Wettengel and Tanya Muro. Wettengel and Muro’s separate firm, which recently rebranded as Crew Enterprises as part of a breakup from Nelson’s Versity, along with Versity affiliates are also currently battling a $56 million fraud and misappropriation lawsuit in New York court brought by lender Knighthead Funding. The plaintiffs allege the founders siphoned proceeds raised from investors to fund personal lifestyles.

The New York litigation took a dramatic turn with a schism between ex-partners earlier this year. In a January court filing, Nelson accused his former partners, Wettengel and Muro, of orchestrating a scheme outside of his control. Nelson alleges that his signatures on an April 2022 amended loan agreement with Knighthead and a “Bad-Boy” guarantee clause were “procured by forgery and/or fraud.” He claims he was not involved in the dealings under the amended loan and that the entities now known as Crew Enterprises are separate and distinct from his firm, Versity Investments.

The case remains pending. A temporary restraining order was entered on Dec. 17 enjoining the defendants from transferring assets, and it remains in effect as the case advances toward trial, while settlement talks simultaneously continue.

Arbitration with syndicator brokers

Furthermore, August Iorio, a New York-based attorney, said he is representing more than 50 retail investors who put a collective $30 million into multifamily and student housing deals sponsored by Versity and Crew. They’re in arbitration disputes with broker dealers who sold the investors shares of the properties in Versity’s and Crew’s respective portfolios, Iorio claims.

Their portfolios include about 23 apartment complexes across the U.S. Nelson was handed control of 18 of them as part of a legal fight with Muro and Wettengel last year, while Muro and Wettengel retained control over a smaller handful of properties, Iorio said.

Multiple properties have fallen into financial distress, and Iorio claims that the broker dealers who sold his clients shares in the real estate deals failed to disclose material information about the Versity sponsors, including that Muro and Wettengel had been previously accused of misappropriating investor funds in a lawsuit in an Orange County, California court that remains pending.

Versity, Nelson and Knighthead didn’t return requests for comment, and neither did Crew Enterprises.

This marks the Buckingham property’s second stint in a foreclosure lawsuit; a previous foreclosure case initiated in 2020 was dismissed following a 2021 forbearance agreement with the property’s landlord. The latest lawsuit alleges the forbearance agreement was breached, as the landlord began missing regular monthly payments last summer. The loan wasn’t scheduled to mature until August 2028.

While The Buckingham falters, another Versity-linked project, Tailor Lofts in the West Loop, is also in uncertain financial territory. Although Tailor Lofts is no longer considered delinquent after its Versity-affiliated ownership was late on payments for several months last year, it remains on a lender watchlist. And Iorio claims investors in the property — which is now managed by Nelson’s firm as part of his settlement with Muro and Wettengel — have been told they may not receive distributions in 2026. For the 12 months ending Dec. 31, 2024, that property maintained 95 percent occupancy and a healthy debt service coverage ratio 1.8, meaning it generated just under twice the amount of revenue needed to cover debt service after operational costs like utilities are paid.