'We bought homes, now the bank owns them': Hidden mortgages haunt buyers

Infographics: TBS

Imagine buying an apartment from a reputed housing company, settling in with your family, and years later discovering that the bank has put your home up for auction.

That nightmare has become real for hundreds of apartment owners across Dhaka, as some developers secretly mortgaged projects to banks before or during construction, took out huge loans, and never disclosed those mortgages to buyers.

When the companies later defaulted, banks sued to recover the loans. Courts ruled in favour of the lenders, and the properties were put up for auction—leaving residents stunned to find their homes listed for sale.

A rising wave of legal battles

Court data shows that from January to September this year, 1,076 writ petitions were filed with the High Court by victims seeking to halt such auctions. These cases involve nearly Tk2,500 crore of buyers' money and name more than 100 housing developers.

The number of such cases has been rising sharply over the past four years.

• In 2024, buyers filed 754 writs involving around Tk1,050 crore.
   
• In 2023, there were 813 writs worth Tk1,000 crore.
   
• In 2022, 618 writs were filed involving Tk800 crore.
   
• In 2021, there were 569 writs linked to Tk750 crore.
   

Meanwhile, the Real Estate and Housing Association of Bangladesh (REHAB) has received about 340 complaints of similar fraud by September this year, involving nearly Tk1,500 crore of customer funds.

'Buyers are legally blind'

REHAB President Md Wahiduzzaman said roughly half of the accused developers are not members of the association, which can only suspend memberships but has no legal authority to act against fraudsters.

"Victims are forced to turn to the courts to protect their homes and savings," he told The Business Standard.

He urged that banks should be legally required to hang clear signboards on all mortgaged properties, displaying the plot number and mortgage details.

"Ordinary buyers can't check every bank to see if a property is mortgaged. Visible signboards must be enforced by law – without them, buyers are effectively blind," he said.

Wahiduzzaman added that many advanced countries have centralised digital registries of mortgaged properties – something Bangladesh still lacks. "Establishing such a system is essential to protect homebuyers," he said.

The case of Bright Future Holding

One such victim, Dr Rafiqul Bari, bought a 1,250-square-foot flat in Bright South, Uttara, in February 2022 for nearly Tk1.5 crore and moved in two months later.

A year on, he was shocked to find a public notice stating that the entire six-storey, 12-unit building had been listed for auction by Sonali Bank's Uttara branch.

Dhaka's Artha Rin Adalat-3 had ordered the auction to recover Tk30 crore in defaulted loans owed by Bright Future Holding. Dr Bari said the developer had issued only a temporary execution deed and repeatedly delayed handing over the original.

Later, he discovered that Chairman Akhtar Hossain Sohel had mortgaged the building back in 2012, borrowed Tk21 crore, and allegedly embezzled the funds. "With just 20 days to go before the auction, we filed a High Court writ and a fraud case," he said. The High Court later suspended the auction on humanitarian grounds.

Investigators say Sohel used similar tactics in at least seven other projects in Mirpur, Khilkhet, and Uttara. He was arrested on 21 October in connection with nearly 50 fraud cases and is accused of embezzling around Tk400 crore.

Sonali Bank's lawyer, Waliur Rahman, defended the auction, saying: "If a company defrauds buyers, it is solely responsible. Auctioning the mortgaged property is the lawful way to recover loans."

He added that while banks are required to hang signboards at mortgaged sites, some owners remove them – beyond the bank's control.

Paying rent for their own homes

For Rafiur Rahman in East Rampura, the experience has been equally devastating.

His developer, Jhalok Housing, mortgaged four flats—including his own—to AB Bank and defaulted on Tk5 crore in loans. When the court authorised the bank to auction the flats in 2022, no bidders came forward, and the bank took possession.

"We now pay Tk15,000 a month in rent to live in our own flats," Rafiur said, adding that several of his neighbours have already moved out. He and others have filed a fraud case in Dhaka, while at least 15 more buyers in other Jhalok Housing projects have lodged similar complaints.

MTB Bank Managing Director and CEO Syed Mahbubur Rahman said Bangladesh Bank's rules require banks to display mortgage signboards and conduct regular inspections. "Failure to enforce this leaves buyers exposed to fraud," he said.

No effective government action

Kamal Mahmud, former vice president of REHAB, criticised the lack of government response: "The housing sector falls under the housing ministry, yet when citizens face such crises, there is no dedicated authority to help. Fraudulent developers operate with impunity."

Housing ministry secretary Md Nazrul Islam said complaints are investigated and that the Real Estate Development and Management Act allows cancellation of company registration and imposition of fines.

Mahmud, however, alleged that collusion by some officials allows such companies to evade accountability.

Apartment buyers say some developers work hand-in-hand with corrupt officials in sub-registrar offices to conceal mortgage deeds.

Sheikh Kawsar Ahmed, executive member of the Bangladesh Registration Service Association (BRSA), said the blame cannot rest solely on sub-registrar offices.

"Once a deed is executed, its information is recorded at several offices, including the AC Land office. Simply checking the sub-registrar's records isn't enough—the mutation process must also be verified," he explained. "Proper checks at all levels could prevent buyers from falling victim to such fraud."