Loan guarantees

7. a. The agency is hereby authorized to contract with institutional lenders to guarantee on behalf of a housing developer the repayment of the full principal balance of that loan outstanding at the time of any default, if (1) the loan was made for construction costs as defined in section 3 of this act; (2) the amount of the loan and the terms on which it was made conform substantially to the amount and terms then available to the borrower on such a construction loan; and (3) the regulations of the agency pursuant to subsection c. of this section are complied with. b. The agency shall establish within the fund sufficient reserves and liquid reserves, aside from those moneys required to meet payments of interest and repayments of principal on bonds issued pursuant to section 4 of this act, to provide a sufficient and actuarially sound basis for its pledges contained in any guarantee contract entered into pursuant to subsection a. of this section. c. The agency shall adopt rules and regulations governing the issuance of loan guarantees pursuant to this section, including: (1) procedures for the submission of requests for such guarantees; (2) standards and requirements governing the allocation of guarantees to applicant institutional lenders, and determining the fees to be charged therefor and the manner of payment of those fees; (3) restrictions as to the maturities and interest rates of any loan, or the return realized therefrom by the institutional lender, upon which a guarantee is to be issued; (4) requirements as to commitments by institutional lenders with respect to loans upon which guarantees may be issued; and (5) any other matters related to the duties and the exercise of the powers of the agency under this section.