Madison Title is Off Fannie Mae’s Blacklist

Madison Title can once again turn on the Fannie Mae spigot.

The Lakewood-based title company said it has been reinstated as an approved vendor by Fannie Mae after the firm was placed on Fannie’s blacklist over a year ago.

Madison’s release from Fannie’s clutches is major relief to the title agency, which is among the largest title agencies in the tri-state.

“Madison is pleased to be doing business again with Fannie Mae,” said a spokesperson for Madison Title.

The company’s president Joseph Rosenbaum announced the news in a meeting on Friday morning to employees, who celebrated with claps in a video circulated through WhatsApp, Yeshiva World News and The Promote’s Hiten Samtani’s X feed, who first posted the news.

Madison Title and another title insurer, Riverside Abstract, were banned from doing business with Fannie Mae early last year after they were mentioned in a Department of Justice press release announcing a broader commercial mortgage fraud scheme.

The DOJ alleged real estate investor Boruch Drillman engaged in a multi-year scheme to obtain over $165 million in loans to fraudulently acquire multifamily and commercial properties. Drillman, alongside his co-conspirators, sought to dupe lenders into giving them larger loans than they should have received, according to the DOJ. (Drillman was sentenced this week to five years of probation, but no jail time; others were sentenced to as much as five years in prison.)

In one of these schemes, Drillman, Moshe Silber and Fred Schulman acquired an apartment complex in Cincinnati for $70 million. The defendants then allegedly used a stolen identity to convince JLL and Fannie Mae that the purchase price was actually $96 million in order to obtain a loan.

Madison Title performed two closings: One for the actual $70 million sale and another for the fraudulent $96 million sale, according to the DOJ.

Madison Title was not accused of any wrongdoing or named as a defendant.

But Madison Title was temporarily banned from Fannie Mae. In a memo sent last year, Fannie Mae’s deputy general counsel said the government-sponsored agency would “accept delivery of any mortgage loan closed using Madison or Riverside in any capacity.”

The year-long blacklist almost certainly hurt Madison Title’s business, as it was unable to do any deals with borrowers seeking out Fannie loans; Fannie Mae and Freddie Mac support about 70 percent of the residential mortgage market.

Title insurance is an opaque but lucrative niche in real estate. It is supposed to prevent fraud and ensure buyers receive a clean and proper title to the property. Madison Title ranked fifth on TRD’s 2018 list of New York’s largest title insurance companies with $2.3 billion in transaction volume.