A major mortgage lender has initiated a federal lawsuit against commercial real estate firm Cushman & Wakefield and one of its senior appraisers, alleging they deliberately misrepresented property values within the portfolio of the now-bankrupt Chasen Cos. The lender, StanCorp Mortgage Investors LLC, claims these flawed appraisals led to substantial financial losses on loans totaling more than $210 million.
The civil complaint, filed on January 23 in the U.S. District Court in Baltimore, targets both the real estate services giant and its executive director, David Masters. StanCorp alleges that between 2018 and 2024, it issued at least 25 loans based on appraisals that were filled with inaccuracies and omissions, ultimately resulting in defaults by the borrower.
Key Takeaways
- Mortgage lender StanCorp is suing Cushman & Wakefield for alleged appraisal misrepresentation.
- The lawsuit claims over $210 million in loans were issued based on faulty property valuations for the Chasen Cos. portfolio.
- Allegations include inflated rent rolls, mischaracterization of renovations, and inaccurate unit descriptions.
- The legal action unfolds as developer Brandon Chasen and his company are undergoing bankruptcy proceedings.
Details of the Federal Lawsuit
The 17-page legal filing outlines a series of claims against Cushman & Wakefield and appraiser David Masters, who reportedly conducted at least 20 of the appraisals in question. StanCorp Mortgage Investors is asking a judge to void its contracts with the appraisal firm and is seeking damages, attorney fees, and interest related to the defaulted loans.
According to the complaint, the appraisals contained significant errors that painted a misleadingly positive picture of the properties' financial health. The lender asserts that these valuations misrepresented the quality of the buildings, inflated potential rental income and occupancy rates, and mischaracterized the extent of renovations performed.
These alleged inaccuracies formed the basis for StanCorp's decision to extend credit to Chasen Cos., a real estate development firm that once managed approximately 2,000 housing units across Maryland, Virginia, and Florida before its recent collapse.
Background on Chasen Cos.
Chasen Cos., led by founder Brandon Chasen, was once celebrated as one of the fastest-growing businesses in the United States. The company specialized in acquiring and renovating properties, but has since unraveled, with both the firm and Chasen himself filing for bankruptcy. This lawsuit is separate from the bankruptcy proceedings, though it is directly related to the company's former real estate assets.
A Specific Example: 817 St. Paul Street
The lawsuit provides a detailed example of the alleged misrepresentations, focusing on an appraisal for an apartment building at 817 St. Paul Street in Baltimore's Mount Vernon neighborhood. The complaint states the appraisal described the property as having a mix of one, two, and three-bedroom units.
However, the filing claims the report omitted a critical detail: 61 of the units were actually studio apartments. This distinction significantly impacts a property's potential rental income and overall value.
Furthermore, the assessment allegedly listed a rental range of $1,975 to $3,400, figures well above the median for the area. The lawsuit also contests the claim that the building underwent a "gut renovation" valued at over $14 million. StanCorp's lawyers argue this is "contradicted by photographs and a basic visual inspection," describing the work as "nothing more than cheap, superficial, cosmetic repairs."
Over $210 Million in Loans: The lawsuit states that StanCorp provided at least 25 loans to Chasen Cos. and its business partner, Paul Davis, based on the appraisals now under scrutiny.
Testimony and Tensions in Bankruptcy Court
While Chasen Cos. is not a defendant in the lawsuit against Cushman & Wakefield, the developer's ongoing personal bankruptcy case has provided a venue for related testimony. During a recent hearing, Brandon Chasen was questioned about his role in the appraisal process.
Under questioning from StanCorp's attorney, Scott Foley, Chasen stated that he was not involved in selecting the appraiser for his properties. "I never selected the appraiser," Chasen testified. "I didn’t have the option to say, ‘This person.’”
"I never selected the appraiser. I didn’t have the option to say, ‘This person.’”
- Brandon Chasen, Founder of Chasen Cos.
He added that Cushman & Wakefield was recommended by ColumbiaNational Real Estate Finance LLC, a mortgage broker. Chasen also testified that no appraisals were completed without a physical inspection of the property.
Contentious Exchanges with Investors
The bankruptcy hearing also featured tense moments between Chasen and some of his company's investors. Tony Bobulinski, an investor who previously testified before Congress regarding business dealings with Hunter Biden, accused Chasen of lying under oath.
Bobulinski claimed Chasen used company bank accounts as his "personal piggy bank," an act he described as "legally embezzlement." Another investor, Barry Honig, engaged in a heated exchange with Chasen's attorney, Adam Freiman, prompting the lawyer to ask, "Are you threatening me?"
The bankruptcy trustee ultimately paused the hearing, which is scheduled to resume on April 22. Cushman & Wakefield has not yet filed a response to the lawsuit and declined to comment on the allegations. David Masters also did not respond to a request for comment.
