1. An urban homesteading agency may provide financial assistance to urban homesteaders for the purchase and rehabilitation of, or construction on, urban homestead program property. Such financial assistance may be in the form of grants or loans for a municipal housing authority formed pursuant to this chapter, and in the form of loans for other urban homesteaders. All such loans, if made by the urban homesteading agency, shall be secured by a mortgage naming the municipality as the mortgagee, provided if any such loans are made from funds provided by the state or federal government or any other public or private entity, the state or federal government or the public or private agency may be the mortgagee, and provided further that a municipality may assign any such mortgage to another entity.

2. An urban homesteading agency may utilize federal, state or other public or private financial assistance, provided that any such assistance requiring local financial participation shall be first approved by the governing body of the municipality.