SB127 Alabama 2019 Session

Under current law, a future advance mortgage, which is created upon its execution, may secure funds advanced at the time the mortgage is executed as well as funds advanced in the future. A recent Alabama Supreme Court opinion held that a future advance mortgage, although recorded, is not created until the lender advances funds under the loan secured by the mortgage, thus potentially eliminating the priority a future advance mortgage has over subsequently recorded mortgages or liens.

This bill would create the Future Advance Mortgage Protection Act.

This bill would clarify that a mortgage may secure not only existing indebtedness but also future advances to the same extent as if the future advances were made at the same time the mortgage was created.

This bill would also provide that this bill would apply prospectively to mortgages created in the future, as well as retrospectively to existing mortgages.

Relating to future advance mortgages; to add a new Article 6, commencing with Section 35-10-120, to Chapter 10 of Title 35 of the Code of Alabama 1975; to establish the Future Advance Mortgage Protection Act; to provide that future advance mortgages are valid and enforceable; and to provide that this article shall apply prospectively to mortgages created in the future and retrospectively to existing mortgages.