(1) Any mortgage may, by its terms, secure future advances up to a total maximum principal amount expressly set forth in such mortgage. Such mortgage shall be effective to secure payment of all advances, both obligatory and optional, up to the stated maximum principal amount to the same extent and with the same effect and priority as if such total maximum principal amount had been fully disbursed on or before the date such mortgage was recorded.
(2) Such mortgage shall also secure, to the same extent and with the same effect and priority, the following additional amounts regardless of whether such additional amounts, when added to the principal amount of the indebtedness, exceed the maximum principal amount stated in the mortgage:
All increases in the principal amount that result from negative amortization or theaddition of deferred interest;
All disbursements made for the payment of taxes, levies, or insurance with respect tothe property subject to the mortgage or made to protect such property from waste, damage, or abuse;
If the mortgage or evidence of debt secured by the mortgage so provides, all reasonable expenses associated with collection of the indebtedness or foreclosure of the mortgage; and
Interest on any of the items specified in paragraphs (a) to (c) of this subsection (2) inaccordance with the terms of the mortgage or the evidence of debt secured by the mortgage.
Subsection (1) of this section shall not apply to any subsequent advance against amortgage instrument after a mortgagee has initially advanced principal up to the maximum amount stated in the mortgage, unless the mortgage instrument clearly states that it was made pursuant to a revolving credit arrangement.
This section shall have no application to the priority of general mechanics' liens arising pursuant to article 22 of this title, and the priority of such general mechanics' liens with respect to a mortgage which secures future advances shall be determined without reference to this section.
As used in this section, unless the context otherwise requires, "mortgage" means amortgage, deed of trust, or other instrument creating a lien on real property to secure the payment of an indebtedness.
Source: L. 2002: Entire section added, p. 377, § 1, effective August 7.