Fannie Mae has taken legal action to assume control of the Del Sol Apartments, a 152-unit complex in Texas City near Houston, following an alleged loan default by its owners. The request for a receiver was filed with the U.S. District Court for the Southern District of Texas on January 26.
The property is owned by entities linked to investors Shlomo Sorotzkin of Lakewood, New Jersey, and Elliot Menchel of Baltimore. In July 2023, Arbor Realty Trust, based in Uniondale, New York, provided an $11.5 million loan for the apartment complex, which was built in 1980.
Loan issues began after a fire in 2024 at Del Sol Apartments displaced about twelve residents and damaged at least sixteen units. According to Fannie Mae’s court filing, this incident led to disagreements between the owners and the lender over loan payments and property repairs.
The foreclosure process started almost a year ago when Fannie Mae issued a foreclosure notice in March after claiming that the owners had defaulted on their loan obligations. Sorotzkin and Menchel subsequently filed suit to block a planned sale in May. The parties reached a settlement in Galveston County District Court where the investors agreed to allow for the appointment of a receiver.
A federal judge appointed Jacqueline Elizabeth Kimaz of Southlake, near Dallas, as receiver on January 27 to manage Del Sol Apartments.
Texas has seen increasing distress among multifamily properties as investors who purchased during low interest rates at the start of the pandemic now face higher debt costs. Industry observers note that foreclosures and receiverships are expected to rise further as approximately $19 billion in commercial mortgage-backed securities debt tied to Texas multifamily assets will mature this year.
