In any foreclosure action the director shall be made a party defendant and shall take all steps in such action necessary to protect the interest of the public therein. No costs shall be awarded against the director. Foreclosure shall not be decreed unless the court to which application therefor is made shall be satisfied that the interests of the lienholder or holders cannot be adequately secured or safeguarded except by the sale of the property. In any such proceeding the court may make an order increasing the rental to be charged for the housing accommodations in the project involved in such foreclosure or appoint a receiver of the property or grant such other and further relief as may be reasonable and proper. In the event of a foreclosure sale or other judicial sale the property shall, except as provided in § 31-1-690, be sold to a limited dividend housing corporation organized under this chapter, if such a corporation shall bid and pay a price for the property sufficient to pay court costs and all liens on the property with interest. Otherwise the property shall be sold free of all restrictions imposed by this chapter.