Found an issue on this page? Let us know and we will look into it as soon as possible.
Illegal for bank employees or family to purchase foreclosed homes they hold the morgage for
Anonymous3 views1 answers
A family member was foreclosing on their property and I went to the bank to see if there was a way I could save the house by paying off the mortgage. I divulged personal family information to them about the house and family . They did not help me purchase or work with me to save the house. After we spoke they decided to let the house go to tax sale. The employee at the bank went into the property with a contractor and other bank officials to inspect the property (I pulled into the driveway as they were coming out of the house). When I went to the tax sale the bank employee (a board member) and her mother were at the sale. The employee said her mother was going to bid on the propery at the tax sale because it was a good investment. The property was taken off the list that morning last year but will go up for tax sale again in a few days. I found out they will try to bid now. Is it illegal what they did at the bank or unethical?
I am unclear whether the property is currently being foreclosed, as well as being subject to sale for delinquent taxes. The specific facts would be important. I am surprised that the bank did not accept your offer to pay off the mortgage (or even to bring it current) and I think you are right to be suspicious.
It would be unethical for a close relative of a bank insider to use confidential information to purchase a property in a foreclosure by the bank. If the property has substantial equity, this would be considered to be a corporate opportunity. Something must have occurred to bring the mortgage current, however, or the foreclosure would have occurred by now.
A tax sale would not ordinarilly be considered to be a corporate opportunity for a lender and thus the same ethical rules would not apply. However, you should be aware that whoever purchases the property will also be required to pay off the mortgage, since it is not divested by an upset [initial] tax sale.
With regard to the tax sale itself, I assume that the owner must have made an arrangement to pay the delinquent taxes last year, failed to pay and now the property is up for sale again. Under these circumstances, the only way to stop the sale is to pay the delinquent taxes in full. From your perspective, it is probably better to pay the taxes rather than to bid at the sale. The Tax Claim Bureau will probably only require you to pay taxes for 2006 and earlier to stop the sale. If the property goes to sale, the amount of the delinquent taxes will be the starting bid. With more than one interested bidder, the sales price could go significantly higher. Incidentally, you should never bid on a property without searching the title.
HOWEVER, I have assumed a lot of facts here and the answer may change if the facts change. I suggest you contact an attorney and go over the matter thoroughly before doing anything. If you advance funds to your relative, you will need to consider how you wish to protect your interest.
