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<br /> 2. Monthly Payment of Taxes, Insuranceand Other Charges.Borrower shall include in each monthly
<br /> payment,together with the principal and interest as set forth in the Note and any late charges, a sum for
<br /> (a)taxes and special assessments levied or to be levied against the Property, (b) leasehold payments or
<br /> ground rents on the Property, and (c)premiums for insurance required tinder paragraph 4, In any year in
<br /> which the Lender must pay a mortgage insurance premium to the Secretary of Housing and Urban
<br /> Development("Secretary"),or in any year in which such premium would have been required if Lender still
<br /> held the Security Instrument, each monthly payment shall also include either: (i)a sum for the annual
<br /> mortgage insurance premium to be paid by Lender to the Secretary,or(ii)a monthly charge instead of a
<br /> mortgage insurance premium if this Security Instrument is held by the Secretary, in a reasonable amount to
<br /> be determined by the Secretary. Except for the monthly charge by the Secretary, these items are called
<br /> "Escrow Items" and the sums paid to Lender are called "Escrow Funds."
<br /> Lender may, 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 unanticipated disbursements or disbursements before the Borrower'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 Escrow 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 duo, Lender may notify the Borrower
<br /> and require Borrower to make up the shortage as permitted by RESPA.
<br /> The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument.
<br /> If Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with
<br /> the balance remaining for all installment items(a), (b), and (c)and any mortgage insurance premium
<br /> installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly
<br /> refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property or its
<br /> acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments
<br /> for items(a), (b), and (c).
<br /> 3. Applicationof 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, special assessments, leasehold payments or ground rents, and fire, flood and other
<br /> hazard insurance premiums,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 Property,
<br /> whether now in existence or subsequently 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 insurance policies and any renewals shall
<br /> be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, Lender.
<br /> FHA Mortgage gage WITH MERS-NE sts Revised 4/96 Amended 7/04
<br /> VMP QV VMP4N■NE)(1105).00
<br /> Wolters Kluwer Financial Services Page 3 of 10
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