Major Court Victory for Alabama Banks

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.  In September 2018, the Court ruled in GHB Construction v. West Alabama Bank & Trust 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.  In response, the Alabama Bankers Association spearheaded an effort to petition the Court to rehear the case.  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.

The rehearing petition had gone unanswered since being filed in October of last year.  But last Friday, the Court unexpectedly withdrew its original opinion  and issued a substitute one, concluding the following: “to 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.”  Though a fractured (5-4) Court decided the original opinion, last Friday’s decision was supported by all nine justices.

For your information, you can read the original opinion here and the latest one here.

Without question, the Court would not have reversed itself without the involvement of the financial services industry.  And that involvement would not have materialized without the support of the Association’s membership.  Thank you for your efforts!

Questions?  Contact ABA Vice President of Legal and Governmental Affairs Jason Isbell at