The owners of a Virginia Beach apartment complex have defaulted on their mortgage, threatening a $27 million refunding bond deal only two years after the bonds were sold.

Standing between bondholders and an extraordinary call, however, is the Federal National Mortgage Association, which issued a passthrough certificate guaranteeing the mortgage. In fact, Fannie Mae now owns the 862-unit Regency Apartments complex after failing to find an buyer for it during a foreclosure sale on Aug. 27.

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