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20110952� If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at a.ny time are not sufficient to pay the Escrow Items when due, Lender may notify the Bortower and require Borrower to make up the shortage as permitted by RESPA. The Escrow Funds are pledged as additional security for a11 sums secured by this Security Insirumen� If Borrower tenders to Lender the full payment of all such sums, Borrower's account sha11 be credited with the balance rema�ning for all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secreta.ry, and Lender shall promptly refund any excess funds to Bonower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Bonower's account shall be credited with any balance remaining for all installments for items (a), (b), and (c). 3. Application of Payments. All payments under Paxa.graphs 1 and 2 shall be applied by Lender as follows: Firs to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premium; Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazazd insurance premiums, as required; Third, to interest due under the Note; Fourth, to amortization of the principal of the Note; and Fifth, to late charges due under the Note. 4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Properiy, whether now in existence or subsequently erected, against any hazards, casualties, a.nd contingencies, including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure a11 improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, Lender. In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Lender, instead of to Bonower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note a.nd this Security Insirument, first to any delinquent amounts applied in the order in Paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal sha11 not extend or postpone the due date of the mottthly payments which are referred to in Paragraph 2, or change the amount of such payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Inshument shall be paid to the entity legally entitled thereto. HCFG-00703 FHA Deed of Truat-NE VMP� Wokera KluwerFinancial Servicea 201112134.0.0.0.4002J20110@24Y Revisad 4/96 04H1 Pege 3 of 90 8 1