Subsequent Advances Endorsement

What are Subsequent Advances Endorsement

The Subsequent Advances Endorsement is made by the insurer who states that the insured mortgage and the credit loan agreement which is included cannot exceed the insurance amount and even though the insurance amount is reached by principal indebtedness, and this has insurance amount is reduced with the passage of time before the advance, the advance has the same kind of priority which is as per the encumbrances and liens and other advances as per the mortgage insured and the policy date except when there are the following factors and if it is disclosed to public records or if it is known to the insured before the advance :

1. If there is a sale or if there is any portion that is transferred or any estate or any interest that is encumbered as a result of the mortgage insured.
2. If there are real estate taxes or if there are special assessments which have been levied.
3. If there is any claim against the property by a mechanic’s lien
4. If there are bankruptcies which affect the mortgagor or mortgagors or interest of the mortgagor.

This however does not allow for the insurance to insure if there are losses or damages based on usury and the endorsement is part of the policy commitment and this Subsequent Advances Endorsement is also stated in the endorsement including it states that there are terms, commitment amount, dates and it ensures that the endorsements which are made prior are not changed at all. This is a document which is necessary for the insurance company to have.

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Subsequent advances endorsement.

The insurer here insures that:
1 In spite of any terms or provisions of the policy to the contrary, advances made subsequent to the Date of Policy pursuant to, and strictly according to the terms of, the insured mortgage and revolving credit loan agreement shall be included within the coverage of the policy not to exceed the Amount of Insurance, even though the principal indebtedness may have reached the Amount of Insurance and have been reduced from time to time preceding such subsequent advance; and
2 That such subsequent advances shall have the same priority over liens, encumbrances, and other matters as advances secured by the insured mortgage as of the Date of Policy, except for the following matters, if any, disclosed by the public records, or actually known to the insured, prior to the date of any such subsequent advance:
(a) There has been a sale or transfer of all or any portion of the estate or interest encumbered by the insured mortgage.
(b) Ad valorem real estate taxes or special assessments levied against the property.
(c) Mechanic’s lien claims against the property.
(d) Bankruptcies affecting the estate or interest of the mortgagor, mortgagors, or any of them.
This endorsement does not insure against loss or damage based upon usury nor any advance made in any period during which a default exists under the terms of the insured mortgage.
This endorsement is made a part of the commitment of policy. It is subject to all the terms of the commitment or policy and prior endorsements. Except as expressly stated on this endorsement, the terms, dates and amount of the commitment or policy and prior endorsements are not changed.