Flagstar Bank has sold $247 million in debt connected to New York City landlord Steve Croman, according to a report from PincusCo. The sale involved notes on 38 loans tied to 49 properties owned by Croman, which together account for about 680 residential units. The buyer is an affiliate of Bellwether Asset Management.
The original loans were issued by New York Community Bank between 2015 and 2020, before it became part of Flagstar. The affected properties are located in various Manhattan neighborhoods such as the West Village, Murray Hill, Gramercy, Kips Bay, East Village, and Alphabet City.
Bellwether Asset Management received financing for the purchase from Centennial Bank. Bellwether manages a portfolio that includes office, industrial, retail, hotel, multifamily and residential lot spaces totaling approximately 138 million square feet.
Relations between Flagstar and Croman have been contentious. In July, Flagstar sued Croman over an alleged $29.6 million debt related to three Stanton Street buildings on the Lower East Side. At that time, Croman was facing seven active foreclosure lawsuits seeking around $51.4 million in principal from him and his companies; temporary receivers had been appointed in five cases.
Croman is also being sued by his former office landlord for more than $1 million in unpaid rent on a Noho office space and faces litigation from his father who accused him of fraud and seeks to dissolve their business partnerships.
Previously identified as one of New York City’s worst landlords, Croman served eight months in prison after being convicted of mortgage and tax fraud involving his multifamily properties in 2018.
The transaction occurred as Flagstar released its third-quarter earnings report. The bank reported holding nearly $9.59 billion in loans backed by heavily rent-stabilized buildings—down about $324 million compared to the previous quarter’s figures.
Approximately 60 percent of Flagstar’s lending exposure to New York City multifamily properties involves heavily rent-stabilized assets. Of these loans, about 45 percent display financial warning signs according to bank disclosures.
