Fannie Seizes Louisville Building From Mordechai Weiss

Fannie Mae is set to take control of the tallest apartment building in downtown Louisville after owner Mordechai Weiss failed to make payments on its loan shortly after closing on the loan.

Fannie initiated a foreclosure lawsuit against the landlord of 800 South Fourth Street in Jefferson County Circuit Court in 2023. Embattled real estate investor Mordechai Weiss, who is based in Monsey, New York, and also known as Mordichai, was listed as a defendant in the lawsuit, the Louisville Business Journal reported.

The lawsuit alleges the building’s owner stopped payments on a $42.2 million mortgage from 2023, just two months after the loan was closed, the outlet reported. The 36-month loan carried an interest rate of 6.1 percent. As of December 2023, the owners owed Fannie Mae $42.3 million plus $54,865 in late charges, the complaint said, according to the outlet.

The court granted a motion to appoint a receiver to make the vacant units ready for occupancy and begin leasing them three months after the lawsuit was filed, appointing Houston-based Tarantino Properties as the receiver.

The foreclosure sale to Fannie was finalized June 30, with Fannie’s $20.2 million offer applied against the judgement owed, meaning Weiss and his affiliated company still owe more than $22 million on the 29-story tower.

The entity 800 City Apartments LLC was the Weiss-led entity Fannie sued for foreclosure. The LLC was previously tied to the Louisville building’s former owner and Midwest apartments investor Jonathan Holtzman, who bought the property in 2015.

Weiss appears to have taken over the LLC from Holtzman between 2019, when a Holtzman-led entity obtained a $37 million loan from Northern Trust for the building, and 2023, when Weiss took out the $42 million loan on the building from Greystone, which then sold the debt to Fannie. It’s unclear from public property records how much Weiss paid Holtzman for the property.

This is not the first foreclosure in Weiss’ portfolio.

Earlier this year, lender Berkadia claimed it lost over $24 million in an allegedly fraudulent apartment deal in Houston with Mordechai Weiss, The Real Deal previously reported. Weiss, New Jersey-based Cross Bridge Title, Elya Kahn of Greenrock Funding and others conspired to create a document trail for a “sham transaction” showing a sales price of $97.8 million to Berkadia in order to secure a $69 million loan, that lawsuit alleges.

Companies affiliated with Weiss secured seven loans from Fannie or sister government-sponsored enterprise Freddie Mac to buy 11 apartment complexes, and some were flipped, so Weiss or his wife secured loans worth more than the properties. At least, nine of Weiss’ properties have faced foreclosure, according to Commercial Mortgage Alert, including the Louisville tower.

Prior to the 800 Tower Apartments foreclosure, Fannie purchased six loans on Weiss’ properties by early 2024, the publication reported. Weiss has reportedly been under investigation by the Department of Justice and the Federal Housing Finance Agency.

— Eric Weilbacher