Dive Brief:
- Fannie Mae is suing a Houston apartment owner for not conducting repairs it claimed to do on the Bellfort Village Apartments complex, which served as collateral on its $13.2 million loan, according to a lawsuit filed Feb. 18 in the U.S. District Court, Southern District of Texas - Houston Division.
- Houston-headquartered Kajal Housing Group took out the loan in August 2022 through Greystone Servicing Co., and it was later assigned to Fannie Mae. The lender alleges breach of contract, saying the defendant neglected upkeep, did not fix urgent safety issues per the loan agreement and also failed to repay the loan.
- In the suit, Fannie Mae is asking for a court-appointed receiver, as well as damages, attorneys’ fees and other costs.
Dive Insight:
Located in West Houston, Bellfort Village Apartments is a garden-style apartment complex built in 1976 with 194 units, according to Yardi Matrix.
Issues came to light on Sept. 22, 2025, when a property condition assessment revealed conditions that negatively impacted the life and safety of tenants, such as deteriorating exterior staircases, sidewalk trip hazards, wood rot on upper walkways and microbial growth from water damage. Fannie Mae ordered the borrower to complete the most urgent repairs by Dec. 20, 2025.
In November 2025, the lender sent a demand letter requesting corrective action and a $826,150 deposit as additional security, but the borrower did neither, according to the lawsuit.
The defendant allegedly told Fannie Mae the repairs were mostly complete, but a follow-up inspection on Feb. 9 revealed that it failed to make the repairs as required, including many of the issues that impacted tenants’ safety, according to the lawsuit. For example, inspectors observed workers painting over rusted stairs without removing the underlying rust and saw staircases and balconies encumbered by rusted metal and rotting wood.
Inspectors also flagged problems with the concrete sidewalks and balconies throughout the property, including areas where the sidewalk was sinking. Broken pieces of concrete were littering the grounds and creating trip hazards for tenants, and there were trash bags over electrical wires, numerous broken windows, exposed rebar and missing fire alarms.
In January, following the alleged defaults, Fannie Mae accelerated the loan, making the full amount due immediately. On Feb. 4, it posted a foreclosure notice scheduling a sale of the property for March 3.
“The case serves as a pointed example of how swiftly enforcement can escalate when a multifamily borrower allegedly falls behind on property condition obligations and misrepresents the state of repairs to a GSE lender,” Mortgage Professional reported.
Multifamily Dive was unable to reach Kajal for comment at press time.
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