Fannie Mae gets receiver for Mendel Steiner’s rentals

The receivers are coming for the late Mendel Steiner’s rental properties.

A federal judge recently granted Fannie Mae’s request to appoint a receiver to take control of Steiner’s 308-unit portfolio around Cleveland.

The Borough Park investor had amassed thousands of multifamily units across the U.S. But in January, Steiner died by suicide at the age of 33, sending shockwaves through Brooklyn’s close-knit commercial real estate community.

Fannie Mae’s lawsuit, which sought to foreclose and appoint a receiver for Steiner’s properties in Cleveland, offers new details about the financial pressure Steiner faced prior to his death.

Fannie sued Steiner and his affiliated entities in 2024, alleging he defaulted on a $22.7 million loan originated by Greystone. Fannie alleges Steiner’s companies failed to pay taxes, falsified rent rolls and failed to provide information during an inspection. Steiner guaranteed the loan, making him personally liable, according to the lawsuit.

The lawsuit alleges Steiner neglected the properties, failing to service any of the fire extinguishers at the properties for two years. Gas was shut off for months and trash piled up at some of his properties, according to Fannie’s lawsuit.

During two years of Steiner’s ownership, occupancy fell from 99 percent to 25 percent.

By September 2024, Fannie sought to appoint a receiver for the properties in Cleveland and Shaker Heights spanning 15 parcels and totaling 333,580 square feet.

But Steiner’s lawyers contested the receivership. They argued a receiver would add an extra layer of cost and Steiner was working hard to address the issues with the properties. Steiner’s father Lieb Steiner filed a declaration supporting the motion to oppose the receiver.

On February 10, Steiner’s counsel filed a “Notice of Suggestion of Death,” which stated that Steiner died a month prior. In late February, Fannie sought an immediate appointment of a receiver for the properties.

The judge ruled in favor of Fannie and appointed Michael Guggenheim as the receiver.

“The evidence submitted by Fannie Mae reveals significant and ongoing damage to the properties due to mismanagement,” Judge Bridget Meehan Brennan said in the order.

In late February, a judge approved Bank of Montreal’s request to appoint a receiver for Steiner’s 800-unit rental properties in Baltimore. Steiner secured a $160 million refinancing from BMO for the properties in early 2024.