Chicago Title Endorsement Handbook - Chicago, IL

ALTA 2006 • 105 FUTURE ADVANCE – LETTER OF CREDIT – FORM 14.2-06 ALTA Endorsement — Form 14.2-06 is available for loan policies only. This endorsement provides coverage for mortgages that collateralize obligations of a borrower under a letter of credit. This endorsement affirmatively insures the priority and enforceability of the lien of the Insured Mortgage with respect to the terms of the mortgage that allow for future advances and the repayment and re-advances of indebtedness. In addition, it includes coverage for the consequences of a variable rate, including possible negative amortization (or interest on interest). This endorsement also covers the effect of the indebtedness on the note being reduced to zero before being increased, and compliance with state laws dealing with what is needed to secure these advances, e.g. if specific language needs to appear on the face of the recorded instrument. This endorsement modifies Exclusions from Coverage No. 3(d). This specific form may not be available in every state due to statutory, regulatory or case law issues. There may be a similar state form available if the ALTA version is not. NOTE: For Illinois Transactions - in paragraph 3 of the endorsement the following will be added to the endorsement as subparagraph c: “The loss of priority of an advance to a mechanic’s or materialmen’s lien”. Also in paragraph 3 of the endorsement the following will be added as a subparagraph d: “Lack of priority of advances made more than 18 months after the date of recording of the Insured Mortgage, except advances made pursuant to 735 ILCS 5/15-1302(b)(1)". ALTA Endorsement — Form 14.2-06 (Future Advance – Letter of Credit – 2/3/11)