Assets Lost By Forfeit
If a financial institution loans money to a customer who is subsequently convicted of a crime, in some cases the customer's assets (cars, house, boat, etc.) can be seized by prosecutors under the asset forfeiture law.
However, most state's laws allow third parties (such as the financial institution) to assert their right to the property before it is sold.
It has come to light that some state prosecutors are ignoring the rights of the financial institution when property has been used as collateral for a loan. The latest case to gain attention was in Michigan, where the Michigan Supreme Court's decision was that third parties lost their rights.
The U.S. Supreme Court, which has already given favorable opinions to financial institutions in the past on this issue, will tackle the problem later this year. Their conclusion is important.
Copyright © 1995 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 12, 8/95
First published on 08/01/1995