Mortgages Flashcards
What is a Future Advance?
A future advance is when a lender advances funds to a borrower over a fixed period of time.
The lender secures a mortgage on the property for the entire amount of money it has agreed to lend, including any future advances.
Future advances are either obligatory or optional.
When is a future advance Obligatory?
A future advance is obligatory if the lender has a duty to advance the funds.
When is a future advance Optional?
A future advance is optional if the lender has discretion whether to make the advances.
What priority do Obligatory Future Advances take?
When the advance is obligatory, as opposed to optional, any future advances will have the same priority as the original mortgage.
What priority do Optional Future Advances take?
Where the advance is optional, and a senior lender has notice of a junior lien, the advance will lose priority to the junior lien.
Most states hold that a mortgagee has notice only when it has actual notice of the lien at the time of the future advance.
