Prior to making a commitment for a mortgage loan or mortgage insurance under this chapter, the authority shall approve a tenant selection plan submitted by the applicant mortgagor. The authority shall adopt and publish regulations from time to time governing the terms of such tenant selection plans. Such plans shall include aggregate family income limits for initial admission and continued occupancy, which may vary with family size and the municipality in which such housing is located; the computation of aggregate family income for the purpose of determining eligibility for occupancy; and procedures relating to tenants whose incomes exceed continued occupancy limits. To the extent possible and consistent with project feasibility, income limits shall be sufficiently flexible to avoid undue economic homogeneity among the tenants of the proposed housing. In the event that a department, agency or instrumentality of the United States or this state participates in the financing of the proposed housing, the regulations of such department, agency or instrumentality shall supersede the terms of the tenant selection plan, to the extent to which they are inconsistent therewith, as to those dwelling units in the proposed housing which are so financed or assisted. Tenant selection plans shall provide that, as between tenants equally in need and eligible for occupancy of a dwelling unit, preference shall be given to families and persons displaced by natural disaster or governmental action, pursuant to such regulations as the authority may adopt and publish.

(1972, P.A. 208, S. 12.)