(a) As used in this section, the term “mortgagee”, means the United States or any department, agency or instrumentality thereof, a production credit association, a bank for cooperatives organized under the Farm Credit Act of 1933, a federal intermediate credit bank or a federal land bank.

(b) Advancements may be made by a mortgagee, or the assignee of any mortgagee under an open-end mortgage to the original mortgagor, or to the assign or assigns of the original mortgagor who assumes the existing mortgage, or any of them, and the mortgage debt and future advances shall, from the time the mortgage deed is recorded, be a part of the debt due the mortgagee, and be secured by the mortgage equally with the debts and obligations secured thereby at the time of recording the mortgage deed for record and have the same priority over the rights of others who may acquire any rights in, or liens upon, the mortgaged real estate subsequent to the recording of the mortgage deed, provided: (1) The heading of the mortgage deed shall be clearly entitled “Open-End Mortgage”; (2) the mortgage deed shall state the full amount of the loan therein authorized; (3) the mortgage deed shall contain specific provisions permitting the advancements; (4) the advancements shall not exceed the difference between the indebtedness at the time of the advancement and the full amount of the loan authorized in the mortgage deed; (5) the advancements shall be secured or evidenced by the original note or notes signed by the original mortgagor, or original mortgagors, or any assign or assigns of the original mortgagor who assume the existing mortgage, or any of them; (6) the mortgage shall not secure any advances made after twenty years from the date of the original mortgage; (7) the original mortgagor or original mortgagors or any assign or assigns of the original mortgagor who assume the existing mortgage, or any of them, are hereby authorized to record a written notice terminating such optional future advances secured by the mortgage, or limiting the advances to not more than the amount actually advanced at the time of the recording of the notice, provided a copy of the written notice shall also be sent by registered or certified mail, postage prepaid and return receipt requested, to the mortgagee or a copy of the written notice shall be delivered to the mortgagee by a proper officer or an indifferent person and a receipt for the same received from the mortgagee, and the notice, unless otherwise specified in the notice, shall be effective from the time it is received by the mortgagee; (8) except that, if the optional future advance or advances are made by the mortgagee or the assignee of any mortgagee, to the original mortgagor, original mortgagors or any assign or assigns who assume the existing mortgage or any of them, after receipt of written notice of any subsequent mortgage, lien, attachment, lis pendens, legal proceeding or adjudication against the real property, then the amount of the advance shall not be a priority as against the mortgage, lien, attachment, lis pendens or adjudication of which the written notice was given; (9) any notice given to the mortgagee under the terms of this subsection shall be deemed valid and binding upon the original mortgagee or any assignee of the original mortgagee from the time of the receipt of the notice by the mortgagee or assignee.

(P.A. 74-320, S. 1, 2; P.A. 77-265; P.A. 79-602, S. 64.)

History: P.A. 77-265 specified in Subsec. (b)(5) that advancements to be secured by “the original” note or notes; P.A. 79-602 changed wording slightly but made no substantive changes.

Cited. 202 C. 566.