Fannie Mae sues Nelson Brothers for default on $23M

The student housing developer missed payments for the Vue on MacGregor, according to the lawsuit

Fannie Mae's David C. Benson and Nelson Partners Student Housing's Patrick Nelson (Nelson Partners Student Housing, Fannie Mae, Getty)
Fannie Mae's David C. Benson and Nelson Partners Student Housing's Patrick Nelson (Nelson Partners Student Housing, Fannie Mae, Getty)

The hits keep coming for the embattled Nelson Brothers Real Estate. Fannie Mae sued the company in Texas last week, alleging it owes $12.6 million for defaulting on a mortgage for a student housing complex in Houston.

The civil suit was filed by the Federal National Mortgage Association, commonly known as Fannie Mae, in a Texas court on Nov. 8 and is related to the Vue on MacGregor, a student living complex near the University of Houston. The suit claims the California-based Nelson Brothers began missing payments on a $23 million mortgage for the building beginning in April 2020.

The firm has been under fire the past year and has settled a number of lawsuits with investors of other properties. Nelson Partners Student Housing, a division of Nelson Brothers, agreed to pay $50 million in damages to its investors under a preliminary settlement approved by a Texas judge, the New York Times reported.

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Residents of Nelson Partners Student Housing properties in other states have complained of poor upkeep and living conditions. Nelson Brothers could not be reached for comment regarding the Fannie Mae lawsuit.

Company CEO Patrick Nelson cited the pandemic as a reason for the company’s financial difficulties and stated it lost $20 million in revenue.

An affiliate of Fortress Investment Group filed to foreclose in February on a $46 million loan Nelson took out in November 2019 to acquire the Auraria Student Lofts in Denver. The affiliate declared Nelson in default at the highrise, where resident complaints included broken elevators.

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