Fannie Mae files pre-foreclosure at 7 Harlem rentals facing $16.5M wrongful death judgment

Fannie Mae filed a pre-foreclosure action in the Southern District of New York yesterday alleging a $2 million loan secured by seven Harlem properties owned by the nonprofit South Bronx Overall Economic Development Corporation, known as SoBro, was in default. The defaults came several months after a state court judge signed a $16.5 million wrongful death judgment that included SoBro and its owner entity for these properties, BUFNY II Associates, LP, as a defendant. SoBro is fighting the judgment in state court.
The seven properties are all on the same tax block and are 531 Lenox Avenue, 163 West 136th Street, 102 West 137th Street, 106 West 137th Street, 110 West 137th Street, 124 West 137th Street and 176 West 137th Street.

This is the fifth pre-foreclosure action above $1 million that Fannie Mae has filed in New York City in the past 12 months, according to PincusCo data.

In January 2023 the family of a construction worker who died in one of the buildings in 2013 was awarded a $16.5 million wrongful death judgment, and Sobro and the owner entity are defendants along with an affiliate of Black United Fund of New York.

According to the pre-foreclosure complaint, “Plaintiff’s mortgage on the Property secures a loan in the principal amount of $2,000,000 which has been in default since June 1, 2023.”

Court filings represent the position of one party and are not necessarily accurate or complete.

Case 1:23-cv-09795-JGLC

Fannie Mae also alleges there was a sale of a 99.9 percent interest, which was not approved by Fannie Mae and therefore it claims was an event of default. That appears to be a reference to a 2021 sale in which Alden Torch Financial entities sold a 99.9 percent stake for $5.17 million to SoBro.

The Fannie Mae complaint continues, “Additionally, in the Demand Letter, Plaintiff gave notice that the BorrowerDefendant’s license to collect Rents at the Property was terminated, and that Plaintiff was then entitled to all Rents as they become due and payable… The Demand Letter went on to demand that any Rents collected by the Borrower-Defendant after the occurrence of the Event of Default on June 1, 2023 be received and held by the Borrower-Defendant in trust for the benefit of Plaintiff, and only applied to “bona fide current operating expenses to third parties in connection with the operation of the property with excess paid to Fannie Mae, to be applied in accordance with the Loan Documents.” As of the filing of this Complaint, the Borrower-Defendant has not turned over any Rents or security deposits to Plaintiff…

“On September 11, 2023, Plaintiff, Lument Real Estate Capital, LLC (the “Servicer”), the Borrower-Defendant, and South Bronx Overall Economic Development Corporation, as “Key Principal,” entered into a pre-negotiation letter… (Relatives of the wrongful death victim) obtained a judgment against the Borrower-Defendant related to a wrongful death suit in the amount of $16,512,427.07 that was perfected on February 6, 2023 and docketed against the Property March 1, 2023. (301007/2014E)

According to the lawsuit the family of the construction worker filed, “On or about March 20, 2013, Plaintiff Decedent, Ebrima Jallow, was engaged in his occupation and employment, when suddenly and without warning or notice, the plaintiff was caused to fall and/or be precipitated to the ground while descending a set of stairs while holding a window at the aforesaid premises.”

Direct link to the property’s ACRIS page.