(2)(a) The department, subject to existing agreements with bondholders, may make privately or federally insured or guaranteed loans for the rehabilitation or improvement of existing single-family homes for persons and families of lower income, manufactured dwellings for persons and families of lower income or manufactured dwelling parks and manufactured dwelling park nonprofit cooperatives that the department determines have a significant percentage of residents who are persons of lower income, if the department finds that:

(A) The supply of funds available through private lending institutions for that purpose is inadequate; and

(B) The housing may be rehabilitated or improved to provide adequate, safe and sanitary residential housing.

(b) The department may cooperate with qualified housing sponsors in the development and implementation of such loan programs. Loans made by the department under this subsection shall be made for single-family homes.

(3) Prior to the making of any loan under this section, the department, with the approval of the council, shall adopt rules governing the making of such loans, including but not limited to:

(a) Procedures for the submission, review and approval of requests for loans under this section.

(b) Standards and requirements for the allocation of loan moneys available among eligible borrowers and the determination of the terms, conditions and interest rates for such loans.

(c) Limitations, if any, on the number of housing units or projects, type of housing units or projects and any other characteristics for the eligibility of housing units or projects for such financing.

(d) Restrictions, if any, on the interest rates to be charged by lending institutions on loans made from such loan proceeds and the return to be realized by the lending institution therefrom.

(e) Commitment requirements applied to residential mortgage financing by lending institutions from the proceeds of such loans.

(f) Schedules of fees and charges to be made by the department in accepting, reviewing and acting upon applications for loans under this section.

(4) The department shall administer the loan program for rehabilitation or improvement of existing single-family homes for persons and families of lower income in accordance with the following requirements and loan criteria:

(a) Eligibility for a loan shall be based on current department income limitations.

(b) A loan may be assumed only by another person of lower income.

(c) The single-family home for which a loan is made must be owner-occupied.

(d) The maximum principal amount of a single loan is $15,000.

(e) An eligible borrower shall have only one loan outstanding under this program at any one time.

(f) An eligible improvement including, but not limited to, a remodeling project shall be defined by rule and the provisions of the Revenue Adjustments Act of 1980 (Public Law 96-499), as adopted December 5, 1980, shall be recognized in that definition.

(g) Loans shall be made in accordance with a distribution of population between urban and rural areas that takes the availability of alternative resources into account.

(h) The department shall work with qualified housing sponsors whenever it is appropriate to do so.

(5) All loans made and all rules adopted under this section shall be designed by the department, with the approval of the council, to expand the supply of funds available in this state for the financing of residential housing units, manufactured dwellings, manufactured dwelling parks, manufactured dwelling park nonprofit cooperatives and housing projects, for persons and families whose income does not exceed maximum household income limits established by the department under ORS 456.620 (4), to provide an adequate supply of safe and sanitary units of such housing, and to promote the effective participation of conventional lending institutions in the financing of such housing and restrict the financial return and benefit to such lenders to that which is necessary and reasonable to induce their participation under this section.

(6) In making loans under this section, the department, with the approval of the council, may prescribe such terms, conditions, maturity dates and interest rate provisions as it considers necessary. [1973 c.828 §20; 1979 c.60 §7; 1979 c.327 §14; 1981 c.691 §4; 1985 c.298 §1; 1989 c.307 §7; 1991 c.739 §8; 2007 c.607 §20; 2015 c.180 §14]