(e) Any municipality or community development agency may, upon the adoption and approval of a community development plan by the legislative body of the municipality in accordance with the provisions of sections 8-169b to 8-169e, inclusive, authorizing such action, establish a default reserve fund to guarantee, up to the limit of the assets of said fund, loans to be made by private lenders for the purchase or rehabilitation of any owner-occupied residential real property containing not more than eight dwelling units, nonresidential or mixed-use property exclusive of any property for industrial purposes, located in an urban area as defined in subsection (v) of section 8-243, subject to the requirements in subdivision (1) of subsection (c) of section 8-169d concerning community development plans. Moneys deposited in such default reserve fund may be used to discharge a municipality's obligations with respect to mortgage obligations guaranteed pursuant to this subsection and to pay costs incidental to such discharge. Amounts received by a municipality in connection with the foreclosure of such mortgages, including insurance proceeds, may be deposited into the municipality's default reserve fund and used to guarantee additional mortgage loans as authorized by this subsection without need for further action by the legislative body of the municipality. Moneys held in a default reserve fund which are not needed for immediate use or disbursement may be invested in obligations issued or guaranteed by the United States of America or the state and in obligations which are legal investments for savings banks in this state and in time deposits or certificates of deposit or other similar banking arrangements secured in such manner as the municipality determines.