(a) For the purposes of this chapter, the agency is authorized to make commitments to insure mortgage loans and to contract to insure mortgage loans eligible hereunder upon such terms and conditions as the agency may prescribe, provided:

(1) Application for mortgage insurance or for a commitment for mortgage insurance has been submitted to the agency by an approved mortgagee holding, or proposing to hold, an insurable mortgage on the housing accommodation;

(2) The mortgage will have a remaining term of not more than forty (40) years from the date of the issuance of the insurance;

(3) The mortgage bears interest, exclusive of premium charges fixed by the agency, at a rate not in excess of the legal rate for such mortgages in this state and agreed upon by the mortgagor, the mortgagee, and the agency;

(4) The mortgage contains a provision satisfactory to the agency varying the rate of amortization to correspond to an anticipated variation in the mortgagor's income;

(5) The mortgage is in such form and contains such terms and provisions with respect to maturity, hazard and title insurance, repairs, alterations, maintenance, payment of taxes and assessments, default remedies, anticipation of maturity, additional and secondary liens, waiver of equitable and legal redemption rights and other matters as the agency may prescribe; and

(6) Such mortgage insurance is necessary to enable the mortgagor to obtain the mortgage loan upon reasonable and affordable terms and conditions.

(b) If the agency, pursuant to the terms of a contract of mortgage insurance, makes any payment upon a defaulted mortgage loan to the mortgagee thereof, the agency shall be subrogated to the rights of the mortgagee.

(c) The directors, officers and employees of the agency shall not be subject to any personal liabilities due to any obligation or debt created or incurred by the agency.