Merchants Bank reveals more exposure to embattled Moshe Silber

"The Carmel, Indiana-based regional bank, which became a go-to lender for multifamily landlords across the U.S., announced last quarter that some of its borrowers were under investigation for mortgage fraud, leading to $46.1 million in write-downs. New court filings reveal the bank's exposure to Moshe Silber, who was sentenced to 30 months in prison. In Silber and his co-conspirators scheme, they allegedly used a stolen identity to obtain an inflated $74 million loan on a Cincinnati apartment complex."

"Merchants Bank provided loans to at least seven of Silber's multifamily properties. Merchants claims it is owed over $61 million on the loans backed by properties in Flint, Michigan; Danville, Virginia; and Pittsburgh, Pennsylvania. Merchants claims in court filings the Silber-linked entities abandoned the properties in 2024, leading the bank to cover the operating shortfalls at the properties. Merchants then appointed receivers who put the properties up for sale. The properties have either received letters of intent from buyers or are under contract to be sold."

"The proposed sale prices suggest Merchants will take large losses. Notably, Merchants claims it has a binding letter of intent to sell the 365-unit Midway Townhomes in Flint, Michigan, for just $1.5 million, according to court filings. It's unclear how much Silber paid for the property, but in 2023, Merchants provided a $21.6 million loan on it, and the new sale price would mark a 93 percent decrease from the loan."

Merchants Bank extended loans to a group of troubled multifamily investors, including entities tied to imprisoned investor Moshe Silber. Federal investigations into mortgage fraud prompted the bank to record $46.1 million in write-downs. Court filings show Merchants is owed more than $61 million on loans tied to properties in Flint, Danville and Pittsburgh. Silber-linked entities allegedly abandoned several properties in 2024, forcing the bank to cover operating shortfalls and appoint receivers to market the assets. Proposed sales and binding letters of intent indicate deeply discounted sale prices that would produce significant losses relative to outstanding loan balances.

Read at therealdeal.com