SPRINGFIELD, Mass. — Fannie Mae and Springfield Gardens, the former owner of dozens of troubled low-income apartment buildings in Springfield, have jointly asked a federal court to dismiss their remaining litigation, potentially ending the last active lawsuit connected to the properties and their widely reported housing-condition problems.

The requested dismissal would be with prejudice, meaning the parties could not revive the same claims later. The filing does not disclose whether the parties reached a financial or other private resolution, and it provides that each side will bear its own legal costs.

Mortgage dispute centered on insurance proceeds

Fannie Mae sued Springfield Gardens in May 2025, alleging the landlord breached obligations tied to a $52.5 million loan used to acquire Springfield multifamily properties during the pandemic.

In its amended complaint, Fannie Mae alleged Springfield Gardens failed to turn over insurance proceeds following fires and other property damage, despite provisions that gave the mortgage enterprise rights over insurance claims involving the collateral properties. Fannie Mae also alleged that the company failed to properly segregate tenant security deposits and last-month rent payments as required under Massachusetts law.

Fannie Mae sought more than $2.3 million in the amended June complaint, according to MassLive. Earlier reports characterized the insurance dispute as involving claims substantially larger than that amount. Springfield Gardens disputed the allegations, calling Fannie Mae’s claims unfounded and an attempted “money grab.”

The joint request to dismiss follows months of litigation activity. In July, a federal magistrate judge ordered Springfield Gardens principals Jacques Schmidt and Abraham Weber, both New Jersey residents, to sit for depositions in Massachusetts after they sought to move the proceedings to their home state. The court noted the owners’ extensive prior Massachusetts business activity and a loan-agreement provision requiring litigation in the state.

Broader tenant and enforcement history

Springfield Gardens, affiliated with New Jersey-based Schweb Partners LLC, formerly owned or operated 62 largely low-income apartment buildings in Springfield. Tenants had reported serious living-condition problems, including insufficient heat, plumbing issues, security concerns, drug activity and squatters, as well as disputes over rents and deposits.

The Massachusetts Attorney General’s Office reached a proposed $10 million settlement with Schweb and related parties in 2025 over allegations of pervasive violations of consumer-protection and landlord-tenant laws affecting more than 1,000 tenants. The agreement required the former owners to pay $2.5 million to the Commonwealth and forgive $7.5 million in alleged unpaid rent. It also barred them from owning or managing Massachusetts real estate.

Springfield Gardens sold its last Springfield property in August 2024, according to reporting on the Fannie Mae litigation.

Collections and servicing implications

For credit, collections and mortgage-servicing professionals, the requested dismissal underscores the distinct but overlapping risks that arise when distressed multifamily collateral becomes entangled with property-condition complaints, tenant-deposit issues, casualty losses and public enforcement.

Key takeaways include:

• Insurance-control provisions matter. Lenders and servicers may seek to enforce loan provisions governing casualty proceeds when property damage threatens collateral value or a borrower’s ability to stabilize operations.

• Tenant funds create separate exposure. Security deposits and prepaid rent can carry statutory handling requirements that are independent of a landlord’s mortgage default and can generate consumer-protection claims.

• Private loan recovery may not address tenant harms. Even if Fannie Mae’s case is dismissed, the Massachusetts attorney general’s settlement remains the principal publicly disclosed remedy for tenants, including rent forgiveness and restrictions on the former owners’ future operations in the state.mass+1

• Distressed-rental portfolios require broader diligence. Loan performance alone may not capture operational, legal and reputational risk when a property owner faces code complaints, casualty events, tenant litigation or regulatory scrutiny.

If the court grants the joint dismissal, the Fannie Mae-Springfield Gardens case will close without a public explanation of the parties’ reasoning or any disclosed payment terms, marking the apparent end of the remaining litigation tied to the former Springfield rental portfolio.