For those of you who originate HELOC's, do your HELOC mortgages state "This is a future advance mortgage?" Our loan documentation vendor is telling us that it's not necessary to have that clause on a HELOC mortgage.

I don't know if it's "necessary" or not, but our mortgages for HELOCs are Future Advance Mortgages. Who's your vendor?

Prior to enactment of Michigan's future advance act, most attorneys relied upon an old land contract case (from the 1800s) indicating that the priority of the mortgage for future advances was established at the time of the recording of the mortgage if the advances were obligatory. The future advance act did not overturn prior case law, it merely supplemented it. However, most attorneys will include the statutory notice and maximum amount secured on the first page of residential mortgages so that a court or a jury does not have to determine whether the advances were obligatory at the time the loan closed.

Our vendor seems to think the future advance clause is only necessary if there's a chance you might increase the credit limit at some future date. After reviewing the Future Advance Act, however, it appears we could lose security priority on some advances if someone were to file a mortgage after ours, so we've decided to continue adding the future advance clause to all of our HELOC mortgages.