Fannie Mae says no to Riverside, Madison; SCOTUS rejects rent law challenges ... and more

The best national real estate stories from The Real Deal. Feb 24, 2024 [View in Browser]( | [$1 for 1 Month]( [The Real Deal Logo](   [The National Logo](   In today’s newsletter, we look at Fannie Mae’s decision to [reject mortgages using major title insurers]( Riverside Abstract and Madison Title. Plus, the Supreme Court [rejects two challenges]( to New York’s controversial rent law, Nir Meir lands himself [in a cell at Rikers]( and a huge West Hollywood hotel project [finds itself deep underwater](. These stories and more below.   [Fannie Mae warns lenders it won’t accept mortgages using Riverside, Madison Title]( [( A Fannie Mae memo sent shockwaves throughout the industry this week, as the agency stated that it would not accept mortgages tied to title insurers Riverside Abstract and Madison Title “until further notice.” The ban comes after the Department of Justice scrutinized a number of deals that each firm separately had with Boruch Drillman. The DoJ named both companies in a recent press release focused on Drillman, who recently pleaded guilty to one count of conspiracy to commit wire fraud after fraudulently obtaining over $165 million in loans. Neither title insurer was charged in the case. But, they both handled fraudulent closings led by Drillman. Shortly after the DoJ’s ruling, rumors began circulating that some servicers and sellers had [stopped doing business]( with the two New Jersey-based firms, who are among the biggest title insurers in the region. As major players in the market, their acceptance by Fannie and Freddie is crucial for lenders seeking to sell loans, making the ban's implications severe. How severe? It’s hard to gauge at the moment, thanks to those three words used in the memo: “until further notice.” The uncertainty casts a shadow over the future of both companies, raising questions about the duration of the ban and its potential impact on their operations. The options for both firms are limited. They could pivot their business to commercial mortgages or high-end residential loans. Riverside’s leadership went with something a bit more drastic, [selling the firm]( to a New Jersey entrepreneur.   Together with Masterworks Investment banks load up on surprising $2.1tn asset class [Masterworks]( Bank of America. UBS. JP Morgan. They’re all building (or have already built) massive investments in one $2.1 trillion (and growing) asset class. It's not private equity, gold, or real estate… It's fine art. Why? Data from Citi shows it’s a potent diversifier with the lowest correlation to equities of any other asset. Contemporary art prices have [even outpaced the S&P 500 by 136%]( over the last 27 years. Masterworks knows the power of art investing. In fact, they just pulled off a streak of four successful exits within two months, bringing them to [21 exits in total, with investors netting returns of 13%, 14%, 16%, and more](. The blue-chip art investing platform has already given 900,000+ users the opportunity to invest in this asset class. Now, [The National readers can skip the waitlist to join here.]( Past performance is not indicative of future returns. Investing involves risk. See Important disclosures at [www.masterworks.com/cd](   [I'm an image]( [Supreme Court rejects last two rent law challenges]( The high court struck down a pair of challenges to New York City’s controversial rent law this week. But, the decision may have left the door open for future cases. [I'm an image]( [Nir Meir pleads for freedom, gets ticket back to Rikers]( The embattled developer arrived at Manhattan criminal court Wednesday, where he pleaded not guilty and asked to be released from jail. By the day’s end, he was back on Rikers Island with his cash bail set at $5 million. [I'm an image]( [Pendry West Hollywood faces debt crisis for owners AECOM, Combined]( In 2021, AECOM Capital and Combined Properties went all-in on a 149-key hotel in West Hollywood, spending $500 million on construction. Then, they tried (and failed) to sell it for just $149 million. Now, they’re fighting to refinance a huge debt pile tied to the project.   Advertisement   [I'm an image]( [Brand Studio Unleashing the Speed and Efficiency of Prefabricated Solutions on the Office-to-Residential Market]( [I'm an image]( [Starwood turns to middle-market lending, $15-50M loans once owned by regional banksÂ]( Barry Sternlicht didn’t beat around the bush during Starwood’s latest earnings call. The firm is doing its best to navigate choppy waters, and will take some losses this year, Sternlicht said. But, they’ve found a profitable niche in the market by filling in where some regional banks have pulled back. [I'm an image]( [Billionaire Diller in contract to buy Beal’s waterfront Miami Beach property for record $45M]( A pair of billionaires struck major residential deals in Miami Beach this week. First, media tycoon Barry Diller paid $45 million for a North Bay Road property. Then, tech mogul [Teddy Sagi bought a teardown]( just down the street for $24 million. [I'm an image]( [Gensler opens the office of the future in San Francisco]( Gensler had ambitious plans for its San Francisco office. Chief among them: build a symbol of the office of the future. The world’s largest architecture firm gave The Real Deal an early look. [I'm an image]( [Brand Studio Peerage Capital’s Steady Hand and Strategic Alliances Propel Luxury Real Estate Investments]( [I'm an image]( [Penthouse owner sues Yitzy Klor’s Strategic over stalled Chicago deconversion]( Strategic Properties’ attempted buyout and deconversion of a Chicago office tower has struggled to get across the finish line for years. Now, a penthouse owner in the building is suing over the failed deal. The firm is also facing [two separate lawsuits]( from a lender and broker at a property on Chicago’s Gold Coast. [I'm an image]( [Applesway, investors delinquent on $60M linked to Houston apartments]( Multifamily investor Applesway and its partners defaulted on a $60 million loan tied to a Houston portfolio. Arbor Realty Trust, the [favorite lender of small multifamily investors](, provided the loan.     [The Real Deal Logo]( [Facebook]( [Twitter]( [Instagram]( [LinkedIn]( [YouTube]( [Manage Newsletters]( | [Unsubscribe]( | [Privacy Policy]( | [Subscribe]( | [Advertise]( The Real Deal 450 West 31st Street, New York, NY 10001 ©2024 TheRealDeal. All rights reserved. [View Online](