My understanding is you would need to disclose the other loan to each lender.  

If this wasn't disclosed to you before you bought the property, you may have a case to get out of the property.I'm not a proponent of suing someone, but if it was never disclosed, that's an issue that may cause you to want to get rid of the property.

Is it illegal to do this if I don't disclose this to my broker?

It needs to be disclosed on the HUD.  

Kudos to you for not giving up when things looked so bad - and kudos to the real estate agent who disclosed everything that was going on.

I would be inclined to suspect your bank person is either not seeing the appraisal themselves or are not disclosing the details.   

For example, we worked on a loan for a couple of weeks in Allentown, which was a refi, appraisal was done/paid, but the owner didn't disclose to the city his plans for expansion. 

You will likely be provided with less information about your investment than would be required to be disclosed to you if the securities were sold to you in an offering registered with the SEC.

None of this was disclosed to me at the time of purchase and there is reason for me to believe there may have been some funny business.

Hello BP community,I'm looking at buying duplex that seems rather promising minus the foundation issue pre-disclosed by the seller.