Alabama banks had a big day in court last Friday, as the Alabama Supreme Court withdrew a harmful 2018 opinion related to future advance mortgages.\u00a0 In September 2018, the Court ruled in GHB Construction v. West Alabama Bank & Trust<\/u> that a future advance mortgage was created when the lender advanced funds and not, as had historically been the case, when the mortgage was executed.\u00a0 In response, the Alabama Bankers Association spearheaded an effort to petition the Court to rehear the case.\u00a0 ABA was joined in this effort by the Mortgage Bankers Association of Alabama, the Alabama Land Title Association, the Credit Union Coalition of Alabama, and the League of Southeastern Credit Unions.<\/p>\n
The rehearing petition had gone unanswered since being filed in October of last year.\u00a0 But last Friday, the Court unexpectedly withdrew its original opinion \u00a0and issued a substitute one, concluding the following: \u201cto hold that a future-advance mortgage remains void in all respects until a debt is incurred would undermine the legal validity of such an arrangement and is not the law in Alabama.\u201d\u00a0 Though a fractured (5-4) Court decided the original opinion, last Friday\u2019s decision was supported by all nine justices.<\/p>\n
For your information, you can read the original opinion\u00a0here<\/a> and the latest one here<\/a>.<\/p>\n Without question, the Court would not have reversed itself without the involvement of the financial services industry.\u00a0 And that involvement would not have materialized without the support of the Association\u2019s membership.\u00a0 Thank you for your efforts!<\/p>\n