A federal judge has appointed a receiver over a Manhattan leasehold after Fannie Mae moved to foreclose
In a significant development for mortgage lenders and servicers, a federal judge in the Southern District of New York has appointed a receiver to assume control of the leasehold estate at 90 Washington Street, Manhattan, after the Federal National Mortgage Association (Fannie Mae) initiated a foreclosure action against the property’s borrower.
The ruling, issued March 21, 2025, by U.S. District Judge Lewis J. Liman in Federal National Mortgage Association v. JDM Washington Street LLC, et al., Case No. 1:25-cv-01728-LJL, grants comprehensive powers to Trigild, a national receivership and asset management firm, to manage and operate the property and preserve its value during the foreclosure process.
The property at issue is the ground lease interest in 90 Washington Street, a residential building in downtown Manhattan held by borrower JDM Washington Street LLC. Fannie Mae, holder of the mortgage, filed suit to foreclose on the leasehold estate due to an alleged default under the mortgage and related loan documents.
Citing concerns about asset preservation and continuity of operations, Fannie Mae moved by order to show cause on February 28, 2025, seeking the appointment of a receiver. Judge Liman agreed that a custodial receiver was “necessary and appropriate for the protection of Plaintiff.”
The court appointed Trigild—acting through David Wallace, Chris Neilson, and Ian Lagowitz—as receiver over the “Receivership Estate,” which includes all tangible and intangible assets of the borrower related to the property, including rents, funds, litigation claims, accounts receivable, contracts, permits, and records.
Key powers granted to the Receiver include:
- Possession and Control: Immediate authority over the Receivership Estate, including the right to collect rents, control bank accounts, and oversee all property operations.
- Continued Property Management: The existing property manager, Residential Management Group, LLC (d/b/a Douglas Elliman Property Management), is retained temporarily and must enter into a new management agreement with the Receiver. The Receiver may replace the manager with court and Fannie Mae approval.
- Borrowing Authority: The Receiver is authorized to borrow funds from Fannie Mae or, at its direction, from the Bond Trustee under the NYC Housing Development Corporation’s bond resolution, to cover operational deficits and undertake required facade repairs. These debts will be secured by Receiver’s Certificates and granted super-priority administrative status.
- Sale and Disposition: With Fannie Mae’s request and subject to court approval, the Receiver may market the property for sale. The borrower has agreed not to object to a sale approved by the court.
Though the order does not involve interpretation of insurance policy clauses, it establishes comprehensive insurance obligations. The Receiver must ensure the property, the Receiver, and the property manager are covered by various insurance lines, including:
- Property damage and general liability;
- Fidelity/crime and cyber coverage;
- Errors and omissions/professional liability;
- Workers’ compensation and business auto liability.
Fannie Mae and the FHFA must be named as additional insureds on all applicable policies. The Receiver’s insurance premiums are not to be paid from Receivership assets but from Receiver funds.
The order also mandates full compliance with applicable federal, state, and local regulations. The Receiver is empowered to obtain or maintain necessary licenses, file regulatory documents, and retain legal counsel—up to $50,000 without further court approval - for handling regulatory matters.
The Receiver must submit monthly budget-to-actual reports and occupancy statistics. A final accounting and report are due within 90 days after the receivership ends. The Receiver must return any surplus receipts to Fannie Mae to be applied toward the borrower’s outstanding debt.
This receivership illustrates the comprehensive protections available to mortgage holders like Fannie Mae when facing borrower default - particularly in high-value, income-generating properties.
The order also affirms that neither Fannie Mae’s rights under the loan documents nor the FHFA’s powers under the Housing and Economic Recovery Act of 2008 are impaired by the appointment of a receiver. Fannie Mae retains the ability to pursue foreclosure independently of the receivership.
For mortgage professionals, servicers, and special asset managers, the case serves as a detailed model for court-supervised stabilization of distressed multifamily assets, demonstrating the level of control and flexibility available through federal receivership in preserving collateral value and ensuring regulatory and operational compliance.
