Walker & Dunlop says a Chicago investor quietly turned a small portfolio of West Side apartment buildings into a loan machine, then let the properties crumble. The lender has filed a pair of foreclosure suits in Cook County accusing the buyer of using rapid, back-to-back sales to jack up prices on modest multifamily buildings, land larger Freddie Mac loans, and then allow the assets to slide into serious disrepair.
The two complaints seek at least $7.1 million and ask a judge to install a receiver to take control of the buildings, which the filings estimate need roughly $7.8 million worth of work. The focus is on smaller apartment properties that Walker & Dunlop says were shuffled through shell entities at inflated paper prices that required little or no real cash from the buyer. The cases land amid a growing pile of lender actions tied to shaky multifamily deals in Chicago neighborhoods.
According to The Real Deal, the complaints, filed June 11 in Cook County Circuit Court, allege investor Chaim Bialostozky used same-day, back-to-back sales to prop up transaction values and secure outsized Freddie Mac financing. One complaint says a four-building portfolio first traded for $3.5 million, then was immediately resold to Bialostozky for $4.6 million. Another alleges that 45-52 North Waller Avenue changed hands twice in a single day, first for $2.7 million and then for $3.6 million. The filings describe property conditions including "excessive mold, squatters, leaking radiators, sloping floors and failed joists," the reporting says.
Lender exposure and company disclosures
Company executives said last year that Freddie Mac asked Walker & Dunlop to review loan portfolios tied to suspected borrower fraud totaling roughly $100 million, according to Investing.com. The firm's Q1 2026 earnings release from Walker & Dunlop also shows it recorded repurchased-loan expenses and continues to manage indemnified loans, a quiet reminder that borrower misrepresentations can translate into very real losses for originators and servicers. Those disclosures help explain why the new Cook County lawsuits matter for both lenders and the GSEs.
Chicago context
Local research and reporting suggest this is not happening in a vacuum. In recent years, out-of-state buyers have chased high cap rates on the South and West Sides, only to find that thin margins and aging buildings make it tough to cover both debt and repairs. The Institute for Housing Studies at DePaul has documented how tight economics and rapid investor turnover leave small multifamily buildings vulnerable to deferred maintenance and lender intervention; see the Institute for Housing Studies for data on the city's housing stock. Those structural pressures make it harder for buyers to budget for capital needs and increase the odds that foreclosures or receiverships follow when loans go bad.
What the suits ask for
Walker & Dunlop, bringing the cases on behalf of Freddie Mac, is asking the court for at least $7.1 million from companies tied to Bialostozky to cover unpaid principal, interest and attorneys' fees, and for a receiver to be appointed to stabilize the properties, according to The Real Deal. The lender's filings say that only the higher, allegedly inflated sales prices appear in Cook County public records and that title paperwork attached to the suits flagged earlier, lower-priced transactions. The cases will move through Cook County Circuit Court, where a judge will decide whether to grant receivership and other remedies the lender is seeking.
The litigation is likely to be watched by other GSE lenders and servicers, since a successful claim could spur more repurchase or indemnification demands and prompt originators to tighten underwriting around small, quick-turn deals. For tenants and neighbors, the immediate question is whether a court-appointed receiver steps in quickly enough to tackle the long repair list described in the filings. We will follow the court docket and lender statements as the case plays out.
