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�01202G97 BORROWER COVENANTS that Boirower is lawfiilly seised of the estate hereby wnveyed and has the right to gant and convey the Property and that the Properiy is unencumbered Borrower warrants and will defend generally the riUe to the Property against all claims and demands, subject to any encumbrances ofrecord THIS SECURITY INSTRiJMENT combines uniform covenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a uniform security insmiment covering real property. iJNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal and Interest. Bonower shall pay when due the principal of, and interest on, the debt evidenced by the Note. 2. Payment of Property Charges. Botrower shall pay all properiy charges consisting of taxes, ground rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall provide evidence ofpayment to Lender, unless Lender pays property charges by withholding funds from monthly payments due to the Borrower or by charging such payments to a line of credit as provided for in the Loan Agreement. 3. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property, whether now in existence or subsequendy erected, against any hazards, casualties, and contingencies, including fire. This insurat►ce shall be maintained in the amounts, to the eutent and for the periods required by Lender or the Secretary of Housing and Urban Development ("Secretary"). Bonower shall also insure all improvements on the Property, whether now in existence or subsequendy erected, against loss by floods to the e�ctent required by the Secretary. All insurance shall be carried with companies approved by I,ender. 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, Botrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made prompdy by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss to I.ender instead of to Borrower and Lender joinfly. Insurance proceeds shall be applied to restorarion or repair of the damaged Property, if the restoration or repair is economically feasible and Lender's security is not lessened. If the restoration or repair is not economically feasible or Lender's seciuity would be lessene� the insurance proceeds shall be applied first to the reduction of any indebtedness under a Second Note and Second Security Instrument held by the Secretary on the Property and then to the reduction of the indebtedness under the Note and this Security Instrument. Any excess insurance proczeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto. In the event of foreclosure of this Security Inshument or other transfer of ritle to the Properiy that extinguishes the indebtedness, all right, tifle and interest of Borrower in and to insurance policies in force shall pass to the purchaser. 4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Lease6olds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence after the execution of this Security Instrument and Borrower (or at least one Boaower, if initially more than one person are Boaowers) shall continue to occupy the Properry as Borrower's principal residence for the term of We Security Instrument. "Principal residence" shall have the same meaning as in the Loan Agreement. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, reasonable wear and tear excepted Borrower shall also be in default if Borrower, during the loan application process, gave materially false or inaccwate information or statements to Lender (or failed to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited to, representations conceming Borrower's occupancy ofthe Properiy as a principal residence. Ifthis Seciuity Instrument is on a leasehold, Borrower shall comply with the pmvisions of the lease. If Borrower acquires fee tiUe to the Properry, the leasehold and fee tifle shall not be merged unless Lender agrees to the merger in writing. 5. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all govemmental or municipal charges, fines and impositions that are not included in Pazagraph 2. Boaower shall pay these obligations on time directly to the entity wluch is owed the payment. If failure ta pay would adversely affect Lender's interest in the Property, upon Lender's request Borrower shall prompdy fumish to Lender receipts evidencing these payments. Borrower shall promptly discharge any lien which has priority over this Security Instrument in the manner pmvided in Paragraph 12(c). If Borrower fails to make these payments or the property charges required by Paragraph 2, or fails to perform any other covenants and agreements contained in this Security Insirument, or there is a legal pmceeding that may si�nificanUy affect Lender's riRltts in the Properiy (such as a proceedin� in Pege Z of 8 HECM First I?eed Of 75ust