(a)  Except as provided in subdivision (b) or in Section 50664, deferred-payment loans may be made only through agreements between the local public entity which has received a fund commitment and the owner of the dwelling unit or rental housing development or through agreements approved by the local public entity between a nonprofit corporation which has received a fund commitment and the owner of the dwelling unit or rental housing development. The agreements shall regulate contractor selection, work to be done, and the schedule of contractor payments, and shall require that the loan be secured by a deed of trust or other adequate security. Agreements regarding housing other than owner-occupied one- to four-family dwellings shall have the prior approval of the department.

(b)  The department may provide deferred payment loans directly to the owner-occupant of a dwelling unit or owner of a rental housing development if it has been determined by the department that the dwelling unit to be assisted is located in an eligible geographical area pursuant to the provisions of this chapter and no eligible local public entity exists in that area.

(c)  All moneys received by the department in repayment of loans made pursuant to this chapter, including interest and payments in advance in lieu of future interest, shall be deposited in the Housing Rehabilitation Loan Fund.

(Amended by Stats. 1981, Ch. 1165.)