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<br />2. Monthly Payment of Taxes, Insurance and 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 s�ciHl ass�sments levied or to be levied against the Properly, (b) leasehold payments or
<br />ground rents on the Property, and (c) premiums for insurance required under 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 al� include either: (i) a sum for the annual
<br />mortgage +ncnra�p premium to be paid by Lender to the Secretary, or (n) a montbly 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 monttily 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 Fstate 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 permitt.ed 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 az►y time are not sufficient to pay the Escrow Items when due, I.ender 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 s�urity 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 />Phe balance remaining for all installment items (a), (b), and (c) and any mortgage insurance premium
<br />installment that Lender has �t become obligated to pay to the Secretary, and I.ender 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. Applicatlon 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 montbly mortgage in�,�ra.,ce premium;
<br />Second, to atry taxes, special assessments, le�asehold payments or ground rents, and fire, flood and other
<br />hazard 'ansurance premiums, as required;
<br />Third, to interest due under fhe 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 (nsurance. Barrower shall insure all improvements on the Property,
<br />whether now in existence or subsequendy erected, against any hazards �iAJ4Al1.1CS' and wntingencies,
<br />including fire, for which Lender requires insurance. This insiu�ance shall be maintained in the amounts and
<br />for the periods that I.ender requires. Borrower shall also insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against loss by floods to the e�ttent required by the Secretary. All
<br />insurance shall be carried with wmpanies approved by Lender. The insutance policies and any re�wals shall
<br />be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, I,ender.
<br />FHA Mortgage WITH MERSNE Ravised 4/98 Ame�� 7/04
<br />� � VMP4NINE) (11061.0�
<br />Woltere Kluwer Flnerxlal5ervicm Pege 3 oi 70
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