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<br />mOI'tgsge �nc�ransP premium to be paid by Lender to the Secretary, or (ri) a monthly charge instead of a
<br />mortgage �*+��*ance premium if this Security Instrument is held by the Secretary, in a reasonable amount to
<br />be determined by the Secretary. F,lccept for the monthly charge by the Secretary, these items are called
<br />"Fscrow Items" and the sums paid to Lender are called "Escrow Funds."
<br />Lender ma.y, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed
<br />the maximum amount that may be required for Borrower's escrow account under the Real Estate Settlement
<br />Procedures Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500,
<br />as they may be amended from time to time ("RESPA"), except that the cushion or reserve permitted by
<br />RESPA for una.nticipated disbursements or disbursements before the Bonower's payments are available in
<br />the account may not be based on amounts due for the mortgage insurance premium.
<br />If the amounts held by Lender for Escmw Items exceed the amounts permitted to be held by RESPA, Lender
<br />shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by
<br />Lender at any time are not sufficient to pay the Escrow Items when due, Lender may notify the Boaower
<br />and require Borrower to make up the shortage as permitted by RESPA.
<br />The Escrow Funds aze pledged as additional security for all sums secured by this Security Instrument. If
<br />Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the
<br />balance rema.ining for all installment items (a), (b), and (c) and any mortgage insurance premium installment
<br />that Lender has not become obligated to pay to the Secretary, and Lender shall prompfly refund any excess
<br />funds to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender,
<br />Borrower's account shall be credited with any balance remaining for all installments for items (a), (b), and (c).
<br />3. Applicetion of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />First, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by
<br />the Secretary instead of the monthly mortgage insurance premium;
<br />Second, to any taxes, sgecial assessments, leasehold payments or ground rents, and fire, flood and other
<br />haZard incnrance pl'emlums, as required;
<br />Third, to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Progerty,
<br />whether now in existence or subsequenfly erected, against any hazards, casualties, and contingencies,
<br />including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and
<br />for the periods that Lender requires. Borrower shall also insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All
<br />insurance shall be carried with companies approved by Lender. The �nc� policies and any renewals shall
<br />be held by Lender and shall include loss payable cla.uses in favor of, and in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if
<br />not made prompfly by Borrower. Each insurance company concerned is hereby authorized and directed to
<br />make payment for such loss direcfly to Lender, instead of to Borrower and to Lender jointly. All or any part
<br />of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the
<br />indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the
<br />order in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged
<br />Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the
<br />FHA Deed of Trus4NE 4 � 6
<br />V�p � VMP4RINE1 111061.00
<br />Wolters Kluwar FlrmrKial Services Page 3 of 10
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