Fannie Mae Requests Receiver For Galveston Apartments

Fannie Mae moved to take control of a Galveston area apartment complex after owners allegedly defaulted on the loan tied to the property.

The government-sponsored lender asked the U.S. District Court for the Southern District of Texas to appoint a receiver for Del Sol Apartments, at 3501 25th Avenue North in Texas City, outside Houston, according to a Jan. 26 filing.

The property is owned by multiple entities tied to investors Shlomo Sorotzkin, who’s based in Lakewood, New Jersey, and Elliot Menchel, based in Baltimore. Fannie Mae said in the filing that Uniondale, New York-based Arbor Realty Trust lent the pair $11.5 million in July 2023 for the 152-unit apartment complex built in 1980.

Loan trouble began for Del Sol’s owners after a 2024 fire at the property displaced a dozen residents and damaged at least 16 units at the complex. The incident also sparked a dispute between owner and lender over loan payments and property repairs, Fannie Mae said in the suit.

The foreclosure process began nearly a year ago when Fannie issued a foreclosure notice in March after claiming the owner defaulted on the loan. Sorotzkin and Menchel sued to block a May sale, according to the filing. The parties settled the dispute in Galveston County District Court, and the investors agreed to have a receiver appointed, Fannie Mae alleges in the suit.

Judge Jeffrey V. Brown issued an order appointing a receiver in a Jan. 27 filing, court records show. Jacqueline Elizabeth Kimaz of Southlake, a Dallas suburb, will manage the property.

Multifamily distress has hit Texas hard, as apartment investors struggled to hang onto properties they purchased when interest rates were low at the start of the pandemic. Experts warn the wave of foreclosures and receiverships is rising, as $19 billion in commercial mortgage-backed securities debt tied to Texas multifamily is set to mature this year.