BROOKLYN, NY – A federal judge has ordered the appointment of a receiver to oversee a Brooklyn property after its owners defaulted on a $1.7 million mortgage, siding with lender Wilmington Trust, National Association, in a foreclosure dispute that has stretched nearly a year.
U.S. District Judge Brian M. Cogan issued the ruling in Wilmington Trust, National Association v. Pacific Street Property Group LLC et al., finding that the lender was entitled to receivership of the property at 1442 Pacific Street pending the outcome of the foreclosure action. The decision grants Wilmington’s motion under standard mortgage terms allowing for a receiver to collect rents and preserve the property when a default continues.
According to court filings, Pacific Street Property Group LLC and its principal, Joshua Soufeh, failed to make the required loan payment in January 2025 and have not remitted any payments since. Wilmington sent a notice of default and demand to cure in August 2025, later accelerating the loan and filing the foreclosure complaint. As of October 31, 2025, the unpaid balance, including interest, totaled more than $1.55 million.
The defendants opposed the receivership request, arguing that appointing a receiver would cause unnecessary harm, that the lender’s notices were deficient under New York law, and that Wilmington lacked standing. Judge Cogan rejected those defenses, emphasizing that New York courts routinely grant receiver motions in foreclosure cases to prevent borrowers from diverting property income once a default occurs.
In his opinion, Judge Cogan noted that mortgage documents in commercial lending typically authorize a receiver’s appointment “regardless of the adequacy of the lender’s security” and “without regard to borrower solvency,” adding that courts recognize the economic logic of such provisions.
The appointed receiver will now assume control of rents and property management duties while the foreclosure proceedings continue. The case reflects a rising number of commercial real estate disputes in New York’s foreclosure courts amid mounting property loan defaults.
Key Points: Federal judge appoints receiver in Brooklyn foreclosure case over $1.7M mortgage default – Brooklyn
- Judge Brian M. Cogan granted Wilmington Trust’s motion to appoint a receiver for 1442 Pacific Street.
- The property owner, Pacific Street Property Group LLC, defaulted on a $1.7 million mortgage in early 2025.
- The court found Wilmington had standing and the receivership clause was enforceable under New York law.
