FUTURE ADVANCES ENDORSEMENT

The Future Advances Endorsement insures the lender that the validity and enforceability of the mortgage will not be affected because the mortgage contains a future advances provision. The endorsement also insures against any loss of priority of the mortgage that is caused by future advances of principle, provided no other adverse matters affecting title arise subsequent to the date of the policy.

Illinois law provides that future advances made more than eighteen months after the date the mortgage was recorded are a lien as to subsequent purchasers and judgment creditors only from the time such monies are advanced. 735 ILCS 5/15-1302. There are exceptions to this rule, such as revolving credit arrangements, but future advances that do not fall into one of the exceptions will have priority only as of the time the advance is made. ATG cannot insure the priority of these advances if they are made after the effective date of the policy, unless a search is prepared and a Date Down Endorsement 2 is issued. The language of the Mortgagee Policy (MPA) limits ATG's liability under most circumstances. However, some future advances provisions state that any advances made after the recording of the mortgage shall relate back and be a lien on the property from the date of the recording of the mortgage. If the member finds this type of language in a mortgage that ATG has been asked to insure, the member should ask an ATG underwriter for assistance in limiting the liability of ATG.

It is important for ATG members to review every mortgage prior to issuing an MPA. If you are asked to insure a future advances mortgage, carefully read the language of the mortgage to make sure the terms do not have revolving credit provisions rather than future advances provisions. If the member determines that the mortgage does contain future advances provisions, the Future Advances Endorsement (ATG Form 270) can be issued if the lender requests it. Please check to be sure you are using the most current version of this endorsement (June 1997). Order this or any ATG form by contacting the ATG Forms Department at 217.403.0114.

© ATG UB1099vol4no4

 

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