Loans made by DSHA shall be subject to the following terms and conditions:

(1) No application for a loan for a housing development shall be processed unless the applicant is a housing sponsor as defined in § 4001 of this title.

(2) The ratio of loan to total housing development cost, and the amortization period of loans made under this chapter which are insured by FHA, shall be governed by the FHA mortgage insurance commitment for each housing development but in no event shall such amortization period exceed 50 years.

In the case of a mortgage loan not insured by FHA, the amount of the loan to: (i) limited profit housing sponsors shall not exceed 95% of the total housing development costs, as determined by DSHA, and (ii) other housing sponsors shall not exceed 100% of the total development cost, as determined by DSHA, and the amortization period of such loans shall be determined in accordance with regulations formulated and published by DSHA; provided however, that any such loan shall be subject to an agreement between DSHA and any such housing sponsor prohibiting the transfer of ownership or management responsibilities by such housing sponsor at any time prior to repayment of at least 5% of the original loan, unless the transfer of ownership or management responsibilities has been ordered by a court of competent jurisdiction to a different housing sponsor.

(3) A loan made hereunder may be prepaid to maturity after a period of 15 years with the consent of DSHA, provided DSHA finds that the prepayment of the loan will not result in a material escalation of rents charged to persons and families of low- and moderate-income in the housing development.

(4) DSHA shall have authority to set from time to time the interest rates at which it shall make loans and commitments therefor. Such interest rates shall be established by DSHA at the lowest level consistent with DSHA’s cost of operation, and its responsibilities to the holders of its bonds, bond anticipation notes and other obligations. In addition to such interest charges, DSHA may make and collect such fees and charges, including, but not limited to, reimbursement of DSHA’s financing costs, service charges, insurance premiums and mortgage insurance premiums, as DSHA determines to be reasonable.

(5) In considering any application for a loan, DSHA shall give first priority to applications for housing developments which will be well-planned, well-designed and which will be a part of or constructed in connection with a major redevelopment program; and shall also give consideration to:

a. The comparative need for housing for persons of low-and moderate-income in the area to be served by the proposed development;

b. The ability of the applicant to construct, operate, manage and maintain the proposed housing development;

c. The existence of zoning or other regulations to protect adequately the proposed housing development against detrimental future uses which could cause undue depreciation in the value of the development; and

d. The availability, where reasonably possible, of adequate parks, recreational areas, utilities, schools, transportation, parking, shopping facilities, churches and other community facilities.

(6) Each mortgage loan shall be evidenced by a mortgage note or bond and by a mortgage which shall be a lien on the housing development and which shall contain such terms and provisions and be in a form approved by DSHA. DSHA shall require the housing sponsor receiving a loan or its contractor to post performance and surety bonds in amounts related to the housing development cost as established by regulation and/or to execute such other assurances and guarantees as DSHA may deem necessary. It may also require the housing sponsors or the contractors to also execute such other assurances and guarantees as DSHA may deem necessary.

(7) Each loan shall be subject to an agreement between DSHA and the housing sponsor which will subject said sponsor and its principals or stockholders to limitations established by DSHA as to rentals and other charges, builders’ and developers’ profits and fees, and the disposition of its property and franchises to the extent more restrictive limitations are not provided by the law under which the borrower is incorporated or organized.

(8) As a condition of the loan, DSHA shall have the power at all times during the construction and rehabilitation of a housing development by a housing sponsor and the operation thereof:

a. To enter upon and inspect any housing development, including all parts thereof, for the purpose of investigating the physical and financial condition thereof, and its construction, rehabilitation, operation, management and maintenance, and to examine all books and records with respect to capitalization, income and other matters relating thereto and to make such charges as may be required to cover the cost of such inspections and examinations;

b. To order such alterations, changes or repairs as may be necessary to protect the security of its investment in a housing development or the health, safety, and welfare of the occupants thereof;

c. To order any managing agent, housing development manager or owner of a housing development to do such acts as may be necessary to comply with the provisions of all applicable laws or ordinances of any agreement concerning the said development or to refrain from doing any acts in violation thereof and, in this regard, DSHA shall be a proper party to file a complaint and to prosecute thereon for any violations of laws or ordinances as set forth herein.

(9) A limited profit housing sponsor may not make distributions in any 1 year with respect to a housing development financed by DSHA in excess of 10% of a limited profit housing sponsor’s equity in such development. Such sponsor’s equity in a housing development shall consist of the difference between the mortgage and the total housing development cost. With respect to every housing development, DSHA shall, pursuant to regulations adopted by it, establish such sponsor’s equity at the time of the making of the final mortgage advance, and for purposes of this subdivision, that figure shall remain constant during the life of DSHA’s mortgage on such development.

(10) Whenever any housing sponsor accumulates earned surplus, in addition to reserves for maintenance, operation and replacement, as DSHA may require in excess of 10% of the initial annual rent roll for the housing development, rents in the housing development shall be reduced to the extent necessary to lower the earned surplus accumulation to such 10% figure in the following fiscal year. Every 10 years the housing sponsor may seek the approval of DSHA for increases in said reserves. To the extent warranted DSHA may grant such approval, if in its judgment there have been increased price levels or unusual maintenance and repayment requirements.

71 Del. Laws, c. 357, § ?6;