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<br />demands, subject to any encumbrances of record.
<br />THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform
<br />covenants with limited variations by jurisdiction to constitute a uniform security instrument covering
<br />real property.
<br />LJIVIFORM COVENANTS. Borrower and Lender covenant and agree as follows:
<br />1. Payment of Principal and Interest Borrower shall pay when due the principal of, and interest on,
<br />the debt evidenced by the Second Note.
<br />2. Payment of Property Charges. Borrower shall pay all property charges consisting of taxes, gound
<br />rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall
<br />provide evidence of payment to Lender, unless Lender pays property charges by withholding funds from
<br />monthly payments due to the Borrower or by charging such payments to a line of credit as provided for
<br />in the Loan Agreement. Lender may require Borrower to pay specified property charges directly to the
<br />pariy owed payment even though Lender pays other property charges as provided in this Paragraph.
<br />3. 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. This insurance shall be mainta.ined in the amounts, to the extent and for the periods
<br />required by Lender. Borrower shall also insure all improvements on the Property, whether now in
<br />existence or subsequently erected, against loss by floods to the extent required by Lender. The insurance
<br />policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and
<br />in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may malce proof of
<br />loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and
<br />directed to make payment for such loss to Lender, instead of to Bonower and Lender jointly. Insurance
<br />proceeds sha11 be applied to restoration or repair of the damaged Property, if the restoration or repair is
<br />economically feasible and Lender's security is not lessened. If the restoration or repair is not
<br />economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied
<br />first to the reduction of any indebtedness under the Second Note and this Security Instrument. Any
<br />excess insurance proceeds over an amount required to pay all outstanding indebtedness under the
<br />Second Note and this Security Instrument shall be paid to the entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that
<br />extinguishes the indebtedness, all right, title and interest of Bonower in and to insurance policies in
<br />force shall pass to the purchaser.
<br />4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
<br />Application; Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's
<br />principal residence after the execution of this Security Instrument and Borrower (or at least one
<br />Borrower, if initially more than one person are Borrowers) and shall continue to occupy the Property as
<br />Borrower's principal residence for the term of the Security Instrument. "Principal residence" shall have
<br />the same meaning as in the Loan Agreement.
<br />Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the
<br />Property to deteriorate, reasonable wear and tear excepted. Borrower shall also be in default if
<br />Borrower, during the loan application process, gave materially false or inaccurate information or
<br />statements to Lender (or failed to provide Lender with any material information) in connection with the
<br />loan evidenced by the Note, including, but not limited to, representa.tions concerning Borrower's
<br />occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold,
<br />Borrower shall comply with the provisions of the lease. If Borrower acquires fee title to the Properly,
<br />the leasehold and fee title shall not be merged unless Lender agrees to the merger in writing.
<br />5. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all
<br />governmental or municipal charges, fines and impositions that are not included in Paragra.ph 2.
<br />Borrower shall pay these obligations on time directly to the entity which is owed the payment. If failure
<br />to pay would adversely affect Lender's interest in the Property, upon Lender's request Bonower shall
<br />promptly furnish to Lender receipts evidencing these payments. Borrower shall promptly discharge any
<br />lien which has priority over this Security Instrument in the manner provided in Paragraph 12(c).
<br />If Borrower fails to make these payments or the property charges required by Paragraph 2, or fails to
<br />perform any other covenants and agreements contained in this Security Instrument, or there is a legal
<br />proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in
<br />bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever
<br />is necessary to protect the value of the Property and Lender's rights in the Property, including payment
<br />of taxes, hazard insurance and other items mentioned in Paragraph 2.
<br />To protect Lender's security in the Property, Lender shall advance and charge to Borrower all amounts
<br />due to the Secretary for the Mortgage Insurance Premium as defined in the Loan Agreement as well as
<br />Page 2 of 8 HECM Second Deed of Tnist
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