(a) The department shall adopt rules governing the making and servicing of a housing rehabilitation loan and the foreclosure of a loan in default. The rules must include:
(1) the requirement that a housing rehabilitation loan be evidenced by a promissory note payable to the state and be secured by a lien on real property in the state; and
(2) the standards under which a household in an area designated by a local government may qualify for a housing rehabilitation loan.
(b) In adopting the standards under Subsection (a)(2), the department shall take into account:
(1) household gross income;
(2) household income available for housing needs;
(3) household size;
(4) the value and condition of the housing to be rehabilitated; and
(5) the ability of households to compete successfully in the private housing market and to pay for sanitary, decent, and safe housing in that market.