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This opinion was issued in the third quarter of 1998.
Mass. Gen. Laws chapter 167E, section 11(a) provides that a state-chartered bank may make, for any purpose, a loan secured by a mortgage on real estate, other than a first lien of certain classes specified in Mass. Gen. Laws chapter 167E, section 2B. A state-chartered bank may offer an open-end loan secured by a mortgage other than a first lien in any amount which, when aggregated with the outstanding principal balance of other mortgage loans on the same property, would not exceed eighty percent of the value of the real estate. M.G.L. c. 167E § 11(b), authorizes a bank to "make or acquire loans upon any real estate as collateral security for a commercial or business loan, provided, however, that said mortgage shall not be taken as the primary security for such a loan" (emphasis added). Such loans or lines of credit also are subject to the limitations on loans to individual borrowers set forth by M.G.L. c. 167E § 14. A bank may make such a loan or line of credit available on an unsecured basis, as provided by M.G.L. c. 167E § 1A. A bank choosing to extend a commercial line of credit should maintain all documentation considered in making the loan and should cite to the statutory authority under which the loan is made.