(a) In order to provide for low interest mortgage loans to low and moderate income families and persons, the municipality may, pursuant to the housing finance assistance plan, (1) make commitments to purchase, and purchase, service and sell mortgages or any interest therein and (2) make loans to lending institutions for the purpose of making any such mortgage loans, provided that any such mortgage shall be a mortgage of realty located within the boundaries of the municipality, and provided further that the aggregate amount of mortgages purchased or loans made hereunder, excluding those insured or guaranteed by any department, agency or instrumentality of the United States of America, a public corporation chartered by Congress, any department, agency or instrumentality of the state, or a provider of private mortgage insurance, shall not at any one time exceed two per cent of the municipality's most recent grand list.
(b) The municipality shall exercise the powers conferred in this section only to provide assistance in the financing of bona fide housing purchase transactions, and it shall take, or shall cause to be taken, all steps necessary to insure that no refinancing of an existing mortgage loan is accomplished either directly or indirectly with the assistance provided for in this chapter.
(P.A. 79-596, S. 6, 17.)
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