With tax sale properties, do banks redeem the properties after the auction? The answer to this question is “maybe.” If a property makes it all the way through auction without the bank coming in and paying off the taxes, it’s likely that the records of the mortgage have been lost or misplaced. An accounting/filing error is usually at fault in these cases. Mortgages are often sold and resold and along the way, paperwork can be misfiled. This is not generally the case, but it can happen. That being said, if the mortgage company that owns the mortgage on a tax property is that disorganized, the chances of them figuring out what happened during the (usually 1 year) redemption period are slim to none. The property will likely be lost, and the mortgage wiped clean when the new owner applies for the deed to the property. However, if the mortgage company does figure out what’s going on in time, they can redeem the property and/or reverse the tax sale and foreclose themselves. If there are tax overages (bids over the amount of taxes owed), they can apply for those excess funds as well. In some places, if the owner applies first, they can collect the funds.
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