((a)) ** In general** The Secretary shall make available a model program to provide direct loans to finance the rehabilitation of low and moderate income single family and multifamily residential properties.

((b)) ** Condition of loans** The Secretary shall establish terms and conditions to ensure that such loans are acceptable risks, taking into consideration the need for rehabilitation, the security for the loan and the ability of the borrower to repay the loan. The Secretary may establish the interest rate for loans under the model program, which shall include special interest rates for loans to borrowers with incomes below 80 percent of the area median income.

((c)) ** Additional restrictions** Guidelines for the model program may require that the property—

((1)) be located in an area that contains a substantial number of dwellings in need of rehabilitation;

((2)) the property  is residential and owner-occupied; and

((3)) the property  is in need of rehabilitation or concentrated code enforcement within a reasonable time, and the rehabilitation of such property is consistent with a local plan for rehabilitation or code enforcement.