After a months-long internal investigation, Walker & Dunlop is now trying to wipe its hands clean of mortgage fraud.
The brokerage and lender announced in its fourth-quarter earnings it had found fraud in about $134 million of its Freddie Mac loans. The loans were in three separate loan portfolios and related to three different borrowers, Walker & Dunlop’s investigation concluded.
Walker & Dunlop’s CEO Willy Walker said on a recent call with analysts that its investigation found that no employees were involved in any fraudulent activity.
“Not a single employee at Walker & Dunlop had knowledge of or participated in the borrowers’ fraudulent flip transactions,” said Walker.
But Walker noted a “banking team” had not adhered to the firm’s loan origination policies and procedures. That team’s employees are no longer at the firm, Bisnow first reported.
The firm did not disclose the name or members of the team or what policies they violated.
Sources told The Real Deal the “team” in question was led by former senior managing director Jared Sobel.
The Promote previously reported that Walker & Dunlop put Sobel and another originator Jeremy Nussbaum on paid leave while an investigation was pending. Sobel and Nussbaum have since left Walker & Dunlop. Sobel and Nussbaum did not return requests for comment.
Walker & Dunlop is one of a handful of lenders that have admitted to mortgage fraud-related problems where borrowers either flipped properties to related parties or inflated rents. The goal of these schemes was to extract larger loans. As of December 31, 2025, Walker & Dunlop said it had $115 billion of loans outstanding with the government-sponsored enterprises like Fannie and Freddie.
The firm initially reported it had mortgage fraud problems at its third-quarter earnings. Freddie Mac asked the firm to investigate a $100 million loan portfolio. After digging through the 266 loans originated by the banking team, Walker & Dunlop discovered an additional $34 million portfolio of loans where a borrower appeared to misrepresent its financials.
Walker & Dunlop expects Freddie to make the lender repurchase all of the $134 million in loans.
Fannie and Freddie do not originate loans, but instead buy them from lenders such as Walker & Dunlop and securitize them to sell to investors. Fannie and Freddie usually request borrowers repurchase loans in the event of fraud. They can also request lenders buy back their loans for other reasons, including if the loans become severely delinquent.
One of Walker & Dunlop’s former borrowers suspected of fraud was Mordechai Weiss, sources told TRD. The Monsey, New York-based investor has faced a litany of foreclosures on his Fannie and Freddie loans originated by Walker & Dunlop. These include a $35 million loan on a 178-unit multifamily property in Greenbelt, Maryland, and a $13.5 million loan on an apartment complex in East Orange, New Jersey.
Weiss is a subject of a much larger investigation by the Department of Justice and the Federal Housing and Finance Agency’s Office of Inspector General related to mortgage fraud, according to sources familiar with the matter. Weiss has not been formally charged with any crime.
Since 2024, Walker & Dunlop has either indemnified or repurchased $222 million of loans from the agencies.
But so far, Walker & Dunlop has written down only a portion of those loans. In the fourth quarter, Walker & Dunlop recognized a $38 million charge related to the loans, including $29 million from loans subject to the investigation.
“We are now evaluating the most efficient path to disposition and expect to execute over the next few quarters,” said Greg Florkowski, CFO of Walker & Dunlop, at its fourth-quarter earnings. “Although there was underlying borrower fraud, many of the loans remain current.”
Walker & Dunlop said it has changed its strategy with troubled loans. Instead of holding the loans to reposition the assets, Walker & Dunlop now seeks to sell the loans or properties underlying the loans.
It also reached forbearance agreements with Fannie and Freddie, allowing the lender to delay buying back the loans. In one case, Walker & Dunlop agreed to a forbearance agreement with Freddie for a $50.7 million loan portfolio, allowing the firm to repurchase the loans in late 2027.
Walker & Dunlop executives essentially blamed all of the underwriting for suspect mortgages on a small group of employees, while patting themselves on the back for the way the firm handled the investigation.
“Nearly 90% of our repurchases to date were with four borrowers and were originated by the team that is no longer with Walker & Dunlop,” said Florkowski. “The actions of a few had an outsized impact over the last two years.” (Walker & Dunlop’s investigation found fraud related to three borrowers; it’s unclear if Florkowski misspoke.)
CEO Walker added during the call, “We acted swiftly, hired skilled outside counsel, acted with full transparency, took accountability for what transpired and improved our people, processes and systems as a result.”
Walker & Dunlop did not respond to a request for comment.
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