Fannie Mae sues owners of Sacramento apartments for unpaid loans, bad conditions
Fannie Mae is suing the owners of a south Sacramento apartment complex alleging they’re defaulting on their loans.
The Federal National Mortgage Association filed the suit earlier this month in Sacramento Superior Court against Hillside Apartments LLC, and its managers — Wei Feng and Asad Khan, both of Sacramento.
The $12.8 million loan agreement was signed November 2023, according to the lawsuit. The loan was secured by the 120-unit affordable apartment complex at 6267 Martin Luther King Jr. Blvd. called Summerset Apartments.
In June, Fannie Mae hired a company to inspect the complex to see if it was being kept in good condition as the loan documents required, the lawsuit alleged. Investigators observed a roach infestation, inoperable security keypads, damaged entry gates, potholes, an inoperable pool and a broken window. The repairs would cost a total of about $667,000, according to court documents.
“Defendant is failing to adequately maintain the property, resulting in unsafe, unsanitary, and deteriorating conditions that endanger tenants and threaten the value of the collateral,” the lawsuit stated.
Khan said the tenants would not be impacted by the process and there are no health or safety issues.
“All property operations remain stable and fully active — including management, maintenance, and resident services,” Khan said in an email. “The mortgage, taxes, insurance, and other property-related expenses are current and in good standing. There are no health or safety issues at the property. Hillside Apartments continues to operate normally, and residents remain our top priority.”
The lawsuit asks for $12.8 million. It also asks for the judge to appoint a receiver to take over control the property, including ability to sell it.
On Thursday, the owners filed for bankruptcy, which effectively pauses the Fannie Mae case.
The complex, which according to county assessor records was built in 1969, complex is located in the Lemon Hill of unincorporated south Sacramento County. That means the state tenant laws apply to the residents, but not the additional protections of the city Tenant Protection Program.
This story was originally published October 24, 2025 at 4:24 PM.
