What happens if the FDIC (Federal Depository Insurance Corporation) holds a mortgage on the property?
Municipal tax liens have priority over all types of mortgages. However, written consent must be obtained before foreclosure can be completed against the FDIC where it holds a mortgage on the subject property. In our experience, such ‘consent’ is never denied, but it always causes delay and sometimes results in a redemption by the FDIC. Experienced tax lien attorneys have the appropriate forms and contact information. • What risks do lien investors face? Some of the risks include Bankruptcy delays; Damage or destruction of the property; Environmental contamination; Valuation of the underlying property; Foreclosure by a subsequent tax lien holder; Loss of premium if foreclosure is not completed within five years; and Morality issues relating to foreclosing on someone’s home. • Can a tax lien be discharged in Bankruptcy? No, but an ‘Automatic Stay’ applies as soon as a bankruptcy petition is filed, so the foreclosure proceedings must stop until a Court Order is obtained allowing for the f
