(a) Loans secured by mortgages the payments of which are insured by the authority shall be legal investments, for all trust companies, banks, investment companies, savings banks, building and loan associations, executors, administrators, guardians, conservators, trustees and other fiduciaries, and pension, profit-sharing and retirement funds. For the purpose of determining the percentage of capital, surplus, assets or deposits which may be invested therein by an institution under the supervision of the Banking Commissioner, such loans shall be treated similarly to loans insured or to be insured by the Federal Housing Administrator. Otherwise, such loans shall not be subject to limitations, conditions or restrictions imposed by law except as provided by this chapter.

(b) The property, real or personal, securing such loans shall be unencumbered except for reservations to the United States of America of fissionable materials and for leases, easements and, in the case of insured second mortgages, prior liens to the extent deemed appropriate by the authority. A certificate of title issued by some suitable person approved by the mortgagee or a policy of title insurance shall be lodged with the mortgagee until the mortgage loan is paid. Loans for construction or rehabilitation shall provide for advances at the discretion of the lender as the work progresses and shall not exceed the amount of the advance commitment to insure without the consent of the authority.