GSE Multifamily Activity: Affordable Housing Focus & Fraud Crackdown

By RadCRE Research · 2026-09-27 · Market Updates

Freddie Mac advances affordable housing initiatives with M-Deal® M-074 and a $10.8 million loan, while Fannie Mae pursues a multi-state mortgage fraud case totaling nearly $44 million [1,2].

GSE Multifamily Lending Adapts Amidst Shifting Landscape

The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, continue to play a pivotal role in the multifamily housing market, with recent activities highlighting their dual focus on supporting affordable housing initiatives and combating fraud. Freddie Mac has announced new financing structures aimed at enhancing affordable housing accessibility, while Fannie Mae is actively pursuing legal action in a multi-state mortgage fraud investigation [1,2].

Freddie Mac's Affordable Housing Commitments

Freddie Mac Multifamily has demonstrated its ongoing commitment to affordable housing through recent transactions. On September 22, 2026, Freddie Mac partnered with Cedar Rapids Bank and Trust Company to close M-Deal® M-074, a streamlined M-Deal structure specifically designed to support affordable housing initiatives [1]. This collaboration underscores the enterprise's efforts to streamline processes for delivering vital housing solutions.

Further illustrating this commitment, Freddie Mac also provided a $10.8 million unfunded forward tax-exempt loan. This financing is allocated to support the construction of new affordable rental housing in Kansas, reflecting a strategic focus on expanding the supply of affordable units in the Heartland region [1]. These efforts align with the broader goal of addressing housing affordability challenges across various markets.

Fannie Mae Confronts Alleged Mortgage Fraud

Conversely, Fannie Mae is actively engaged in confronting alleged misconduct within the multifamily lending space. The enterprise is involved in a South Side Chicago lawsuit against Lakewood, New Jersey-based real estate investor Chaim Bialostozky, alleging mortgage fraud [2]. This legal action is part of a wider federal lender crackdown, with identical fraud and foreclosure claims emerging in multiple states, including Connecticut and Oklahoma.

The allegations against Bialostozky involve fraudulently inducing loan originators into providing federally backed debts that were reportedly larger than they should have been. This was allegedly achieved by misleading lenders about the size of his transactions [2]. Public records indicate that the total mortgage debt tied to these alleged fraudulent activities spans nearly $44 million, signifying a significant financial impact across multiple properties and jurisdictions [2]. Fannie Mae's pursuit of this case underscores the GSEs' vigilance in protecting the integrity of their lending programs and safeguarding against financial malfeasance.

RadCRE Perspective

"The latest developments from the GSEs paint a clear picture of their bifurcated mandate: aggressively promoting affordable housing while rigorously defending against fraud. Freddie Mac's M-Deal M-074 and the $10.8 million loan for new affordable housing in Kansas are crucial steps in alleviating the ongoing housing crisis. However, Fannie Mae's pursuit of the $44 million alleged mortgage fraud case against Chaim Bialostozky in multiple states highlights the persistent risks and the need for robust underwriting and due diligence. For investors, these events underscore the importance of aligning with reputable partners and understanding the nuances of GSE lending, particularly in affordable housing where regulatory support is strong but scrutiny on compliance remains high. The market rewards those who navigate these complexities with integrity and expertise."

Tags: Fannie Mae, Freddie Mac, Multifamily Lending, Affordable Housing, Mortgage Fraud