I am putting together a one closing construction product. I had an attorney review the package. The only issue he had was my choice of Mortgage. He stated that we need to use a future advanced mortgage because we were not disbursing money up front, the money would be disbursed based on work completed over teh construction period. What do other lenders do in Michigan? I talked with a few banks out of state and they do not use a mortgage with the future advanced clause. Help!

Since I've been at the bank, we use Bankers Systems documents. They have a Future Advance Mortgage that we use frequently (almost always in reality); they can be tricky though if you cap the amount in the mortgage and then renew or amend the note and refer back to the original mortgage. If you want more information, PM me and I'll help if I can.

Prior to the Future Advance Act, most attorneys would tell you that the priority of the mortgage related back to the date of recording if future advances were "obligatory." This rule was based on a 100 year old court decision involving a land contract. The Act did not change the law - it only provided another avenue to secure the priority of the future advances. This is not much comfort if you do not use a future advance clause, since you could end up in litigation, and attorneys fees would be expensive. You may want to talk to your title agency. If you are getting date down endorsements at each draw, the title policy should provide some insurance that your advances are secured by a senior lien.