Endorsements: Form 2070 Instructions

NOTES:

Coverage: 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 the priority of the future advances provided that there are no intervening liens, encumbrances, defects, or other adverse title matters arising after the Date of Policy.

Under Illinois law, the priority of future advances will relate back to the date of recording of the mortgage only if the advances are made within eighteen months after the date the mortgage is recorded, and only if the lender is bound by the terms of the mortgage to make the advance, i.e., the advance is obligatory and not optional. 735 ILCS 5/15-1302.

In Wisconsin, the advance has priority as long as the lender had no actual knowledge at the time the advance is made of any intervening liens or encumbrances. W.S.A. 706.11(1m)(b).

The endorsement excludes from coverage losses due to: 1) Federal tax liens; 2) taxes assessed by any governmental entity; 3) mechanic's lien claims; 4) liens and encumbrances known to the insured prior to the advance; 5) bankruptcy affecting the insured's interest prior to the advance; 6) notice by the borrower to the insured of the termination of the mortgage; 7) failure of the insured to comply with the Illinois or Wisconsin statute regarding future advances; and 8) losses due to violation of any usury, truth-in-lending, or consumer credit protection laws.

Procedure: This endorsement is for Loan Policies only for either commercial or residential transactions involving Illinois or Wisconsin property. Examine the mortgage to be sure it is actually a future advances mortgage and not a revolving credit or reverse mortgage. Determine that the mortgage complies with the appropriate state statute regarding future advance mortgages.

Questions? Contact an Underwriter.