Any owner of land, which is subject to a sinking fund mortgage held by an association which has been dissolved, may apply in writing to such association, within 90 days after the date of its dissolution, for an extension of time, not exceeding 5 years from the date of said dissolution, within which the amount due upon such mortgage, and the obligation accompanying the same, shall be paid. The association shall grant such request, provided that:

(a) There shall be no existing default in the performance of the terms and conditions of said mortgage and obligation; and

(b) The applicant shall agree to perform all of the other terms and agreements of said mortgage and obligation; and

(c) The applicant shall agree to pay monthly, in reduction of the principal sum due on said mortgage and obligation, such amount as the association shall require, not exceeding, however, 1% of the amount of the original loan secured by said mortgage. Such amount shall be applied first to the payment of interest and other lawful charges, and the surplus to the reduction of the principal. Nothing herein contained shall prevent the association and the applicant from agreeing upon the payment of larger monthly payments.

If, at the date of said dissolution, any default has existed for more than 2 months in the performance of any of the terms and conditions of said mortgage and obligation, the application for extension of time may be refused, or granted upon such terms as the association may prescribe.

The provisions of this section shall not be construed to prevent an association in liquidation from making any compromise which it is otherwise authorized to make.

L.1963, c. 144, s. 236.