The former owners of a Georgia apartment complex sued Arbor Realty Trust for allegedly locking them into a high-interest loan with the promise of refinancing, only to lead the owners into foreclosure and buy the property from them at auction.
Brothers Yisroel and Hanoch Cimerring, who bought the 474-unit complex in College Park, Georgia for nearly $45 million, allege that Arbor offered them a two-year bridge loan for the apartment complex under the impression that they would later refinance the property using a Fannie Mae loan. However, the lawsuit alleges that Arbor strung the brothers along with the promise of refinancing while forcing them to pay high interest rates on the bridge loan, leading the property into foreclosure and allowing an Arbor affiliate to purchase the apartment complex for $40 million at a foreclosure auction.
The brothers filed a lawsuit in late March in New York state court and are seeking $175 million in damages from Arbor.
Arbor, the New York-based lender led by Ivan Kaufman, asked the judge in June to dismiss the lawsuit, arguing that the Cimerring brothers filed the lawsuit to avoid a deficiency judgment on the apartment complex in Georgia state court. Arbor said that it intended to secure the refinancing and got pre-approval from Fannie Mae, but could not go through with the deal when the brothers refused to make the repairs it requested.
“Arbor firmly denies all allegations,” an Arbor spokesperson wrote in a statement to The Real Deal. “The properties were mismanaged by the property owners, as evidenced by actions taken by local authorities. After monetary defaults occurred, we foreclosed on the property last year. We will be seeking deficiency judgment against the sponsors for the balance owed to Arbor.”
The relationship between the Cimerring brothers and Arbor goes back almost a decade, with the two having worked together to close over 20 loans, including 13 Fannie Mae transactions, over seven years, according to Arbor’s motion to dismiss.
The Cimerring brothers first purchased the Chelsea Gardens Apartments, located at 255 West 23rd Street, in 2022 for nearly $45 million using a $37.1 million bridge loan from an Arbor affiliate, according to the lawsuit. The brothers claim they paid Arbor over $350,000 on a rate cap for the loan to keep the rate at 5.75 percent for two years.
The Cimerrings allege they never missed a debt payment until 2024, invested over $4 million in renovations and increased occupancy from 50 to 90 percent, leading to a $55 million appraised value.
But the brothers allege that when they approached Arbor in late 2023 to transition from the bridge loan to permanent financing, Arbor conducted three consecutive on-site inspections and identified hundreds of thousands of dollars in repairs that it asked the brothers to make immediately.
“This suit details defendants’ disturbing and deliberate scheme that has stripped our client of a major commercial property and caused it significant harm,” Terrence Oved and Darren Oved of Oved & Oved, the lawyers representing the Cimerrings, wrote in a statement to The Real Deal. “This is a harm which we are determined to significantly remedy.”
The due diligence firm Velocity Consulting initially gave the apartment complex its second-highest rating after an on-site visit in February 2024. But the firm downgraded the property rating from a two to a three two months after Arbor conducted two more on-site inspections, according to the lawsuit. The rating was below Fannie Mae’s standard for a refinancing.
The brothers accuse Velocity of being in on Arbor’s scheme to take control of the property by downgrading its rating despite only visiting the property once.
“The single cause of action against Velocity is completely without merit, and Velocity has already filed a motion to dismiss the complaint,” said Neal Klausner of Davis + Gilbert, the lawyer representing Velocity Consulting.
The brothers allege that Arbor never approached Fannie Mae about their loan at all and delayed sending the loan to Arbor’s loan committee for approval. They allege that Ryan Duff, an Arbor VP, told them that Arbor had a poor relationship with Fannie Mae.
By March 2024, the two-year rate cap on the bridge loan had expired, the interest rate nearly doubled, and the brothers soon defaulted on their loan. Then, an Arbor affiliate purchased the property at a foreclosure auction for $40 million, according to the lawsuit.
In its motion to dismiss, Arbor tells a different story. The firm alleges the brothers defaulted on their loan, mismanaged the property until it fell into a state of disrepair, and lost the property in a lawful foreclosure sale. Arbor provided evidence that the firm reached out to Fannie Mae about the loan, which Arbor claims provided pre-approval in January 2025. Arbor further alleges that Fannie Mae’s pre-approvals were conditioned upon Arbor addressing the scope, budget and schedule for any improvements performed by the brothers and underwriting the loan according to Fannie Mae’s standards.
Arbor claims Velocity initially rated the property a two and recommended $300,000 in repairs after an on-site inspection in February 2024, but say that an Arbor engineer discovered an additional $300,000 in repairs involving fire-damaged units and rated the property a three on a follow-up site visit in March 2024.
Afterward, Arbor’s loan committee raised concerns about whether the brothers would make the repairs it requested.
“Fannie Mae is cracking down hard on asset quality and specifically looking at tougher properties coming off our books,” Ryan Nichols, Arbor’s chief underwriter, wrote in an email to the loan committee. “Given that we need to make sure everything is really tight here and all that we have appropriate immediate repairs. I know we have already had a few inspections but need this last one.”
On a second follow-up inspection in April 2024, the Arbor engineer again rated the property a three, citing the fire-damaged units. By late April 2024, Arbor’s loan committee concluded they could not go through with the deal until the repairs were made.
“We can’t do this deal until the work is done,” John Caulfield, Arbor’s COO, wrote in an email to the loan committee.
So Arbor asked the brothers to complete the repairs immediately, and Velocity downgraded the property in a revised report based on new information from the building’s manager and building code violations, according to Arbor’s motion to dismiss.
But Arbor alleges that the Cimerrings refused to make the repairs. Instead, the brothers asked to modify the loan agreement to facilitate payments on the bridge loan, and Arbor agreed, allegedly giving the Cimerrings hundreds of thousands of dollars allocated to renovations to ensure they could make their payments. By December, however, Arbor alleges the brothers couldn’t keep up with their debt payments and defaulted. In February, Arbor’s affiliate purchased the property at a public foreclosure auction as its only bidder, according to the motion, and Arbor sued the Cimerring brothers in Georgia state court to seek confirmation of the foreclosure sale. Soon after, the brothers sued back, the motion claims.
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