Santander hits Ostad family with six more foreclosure suits

TL;DR

Santander Bank filed six additional foreclosure suits against the Ostad family over defaulted loans on rental properties.[[1]](https://www.crainsnewyork.com/real-estate/santander-bank-hits-ostad-family-six-more-foreclosure-suits/)[[2]](https://www.crainsnewyork.com/real-estate/santander-bank-hits-ostad-family-six-more-foreclosure-suits)
The suits cover about $32 million in loans backed by 140 apartments across six sites, including 3240 Third Ave. in the Bronx.[[2]](https://www.crainsnewyork.com/real-estate/santander-bank-hits-ostad-family-six-more-foreclosure-suits)
These follow three earlier suits and tie to family infighting plus distress in NYC rent-regulated rentals.[[3]](https://www.crainsnewyork.com/real-estate/commercial/cny-ostads-face-foreclosure-at-four-new-sites)

The story at a glance

Santander Bank, which acquired loans from the failed Signature Bank, sued brothers Edward and Michael Ostad over six more rental properties after three prior suits. The actions claim defaults on $32 million tied to 140 units, mainly rent-stabilized apartments in the Bronx, Manhattan, and Brooklyn. This comes amid a family dispute where the older brothers sued their younger brother Steven in April 2025 to dissolve partnerships, coinciding with halted payments.[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)

Key points

Santander claims the Ostads defaulted on loans originated by Signature Bank in 2020, with one specific case involving a $4.5 million loan.[[2]](https://www.crainsnewyork.com/real-estate/santander-bank-hits-ostad-family-six-more-foreclosure-suits)
Six new properties include 3240 Third Ave., a rental tower in the Woodstock section of the Bronx; others in Highbridge, Hamilton Heights, Sunset Park, East Harlem, and Fordham.[[1]](https://www.crainsnewyork.com/real-estate/santander-bank-hits-ostad-family-six-more-foreclosure-suits/)[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)
Overall, nine suits total more than $70 million across properties mostly with rent-regulated units.[[5]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans)
Payments stopped in April 2025, the same month Edward and Michael sued Steven, who is named in three suits as a passive investor.[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)
Lender seeks personal recovery from the brothers via guaranty agreements, alleging breach and rent misappropriation.[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)

Details and context

The Ostad brothers—urologists-turned-investors Edward and Michael (leaders of Flatiron Realty Capital) and Steven (former founder of Empire City Realty)—own rent-stabilized rentals vulnerable to NYC's rent laws, rising costs, and higher interest rates after Signature Bank's 2023 collapse.[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/) Santander took over such loans and has pursued aggressive foreclosures on distressed multifamily assets.[[6]](https://traded.co/blog/santander-files-nine-pre-foreclosures-on-rent-regulated-nyc-rentals-70-5-m-hit-for-landlords)

Family tensions escalated when Edward and Michael called Steven the "black sheep" blocking partnership dissolution, amid falling property values below $80 million in secured debt.[[7]](https://www.morrisoncohen.com/insights/christopher-milito-quoted-in-the-real-deal-on-dispute-involving-rental-portfolio)

These suits follow initial filings on November 13, 2025, for three Upper Manhattan sites over $40 million.[[8]](https://www.crainsnewyork.com/real-estate/santander-bank-sues-edward-and-michael-ostad-foreclosure)

Key quotes

Steven Ostad's attorney, Christopher Milito: "We find it more than coincidental that debt service payments allegedly stopped in April of 2025 – just as Steven’s brothers sued him on April 14, 2025."[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)

Milito: "Steven is a passive investor... 'shocked' to learn payments weren’t made" and his brothers had "exclusive control of the properties’ finances."[[4]](https://therealdeal.com/new-york/2025/11/17/ostad-brothers-facing-foreclosure-suits-over-70m-in-loans/)

Why it matters

Rent-stabilized portfolios face rising foreclosures as NYC laws cap rents while expenses climb, hitting family-owned assets hard. Owners like the Ostads risk losing buildings and personal liability, while lenders like Santander push to recover on inherited Signature loans. Watch court outcomes on guaranties and family suit, plus potential sales or more defaults in similar rentals.