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�a12�251� monthly payments which aze 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 Instrument shall be paid to the entiry legally entitled thereto. In the event of foreclosure of this Security Instrument or other transfer of ritle to the Property that extinguishes the indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser. 5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. Bonower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and sha11 continue to occupy the Properly as Borrower's principal residence for at least one year after the date of occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall norify Lender of any elctenuating circumstances. Bonower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in defautt. Lender may take reasonable action to protect aad preserve such vacant or abandoned Properly. Borrower shall also be in default if Borrower, during the loan applicarion process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with any material information) in co�ection with the loan evidenced by the Note, including, but not limited to, representations concerning Borrower's occupancy of the Property as a principal residence. If this Security Insmiment is on a leasehold, Borrowet s�hall comply with the provisions of the lease. If Borrov�er acquires fee ritle to the Property, the Iease.hold and fee title shalt not be merged unless Lender ag�ees to the merger in writing. 6. Ccinclemnation. The proceeds of any award or claim for damages, direct or consec}uential, in conn�rion with any condemnation or ather taking of any part of the Property, or for conveyance in place of «rondemnation, are hereby assigned ar►d shall be paid to Lender to the extent of the full amouat of the indebtedness that remains uuflaid uncier the Note and this Security Instrument. Lender shatl apply such proceeds to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order provided in paragraph 3, and then to prepayment of principal. Any application of the praceeds to the principal shall not extend or postpone the due date of the monthly payments, which aze referre� to in pazagra.ph 2, or change the amount of such payments. Any excess pror.eeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the ernity legally enritled thereto. 7. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all governmental or municipal charges, fines and impositions that are not included in paragraph 2. Borrower shall pay these obligarions on time directly to the entity which is owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lender's request Borrower shall promptly furnish to Lender receipts evidencing these payments. If Borrower fails to make these payments or the payments required by paragraph 2, or fails to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a proceeriing in banlmiptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in pazagraph 2. FHA Deed of Trust-NE VMP � Watters Kluwer Financfal Services 4/96 VMP4RlNE) (1709) Page 4 of 10