Maverick Ordered to Pause Foreclosure on Midtown Building

A borrower has accused Maverick Real Estate Partners of muddying the waters of a loan extension to foreclose on a property.

Now, the borrower has notched a temporary win with a court ordering the lender to halt any foreclosure.

The borrower, connected to Hilson Management and the Schwalbe family, owes a Maverick affiliate $41 million. But when the borrower tried to extend the loan, Maverick’s affiliate allegedly engaged in “vulturous tactics” — agreeing to take a $400,000 fee to settle the issue, taking the money and then refusing to hold up its end of the bargain, according to the complaint.

Maverick has gained a reputation as an aggressive real estate lender, buying up debt to foreclose. The allegations in the complaint provide an inside look at the firm’s playbook, including conduct that may be over the line for the court.

The building at the center of the loan is an early 20th-century property known as the Gorham Building, located at 390 Fifth Avenue. The building has been connected with the Schwalbe family since at least 1969, according to public records.

The borrowers owed a $41 million payoff to Maverick due this past New Year’s Eve. But the agreement included an option to extend the loan, one that the borrowers intended to exercise.

But after the borrowers reached out and paid a $200,000 extension fee, Maverick allegedly piled on additional requirements. Maverick told borrowers they had to pay $1.5 million in interest shortfall to extend the maturity date, contrary to the loan agreement, the complaint alleges.

The parties allegedly agreed to a $400,000 sum instead, one that the borrower wired over.

But when Maverick sent out an extension agreement, that number suddenly became $750,000. After the borrower sent over more money, Maverick allegedly said it would refuse to extend the loan at all without the $1.5 million and would instead file for foreclosure on the property.

The complaint alleges that Maverick has yet to declare an event of default, but has nonetheless instituted a full cash sweep, leaving the borrower unable to pay for operating expenses.

The plaintiff’s attorneys, Terrence and Darren Oved of Oved & Oved, said the court’s order sends a message to the defendant that its attempts at coercion will fail.

“Our client’s $50 million damages claim underscores the significant harm caused by Defendant, a harm which we intend to remedy,” the attorneys said in a statement.

Neither Maverick nor its attorneys on the case immediately responded to a request for comment.

In a letter to the court, attorneys for Maverick said the plaintiffs had a “tortured reading” of the loan agreement, which they say plainly requires the interest shortfall paid to secure an extension.