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20120366� In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insuzance wmpa�+ concerned 'as hereby authorized and directed to make payment for such loss directly to Lender, instead of to Borrower a� to Lender joinfly. All or any part of the insuranee proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to anY delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or (b} to the reqtoration or repair of the damaged Properiy. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments which aze referred to in paragiaph 2, or change the amount of such payments. Any excess insurance procceds over an amount required to pay all outstanding indebtedness under the Note and tl�is Security Instrument shall be paid to the entity legally entided thereto. In the event of foreclosure of this Security Instrumenf or other transfer of dde to the Property tbat extinguishes the indebtedness, all right, tifle and in�t of Borrower in and to insurance policies in force sball pass to the purchaser. Occupency, Preservetion, Maintenance and Protectlon of the Property; Borrower's Loen Application; Leaseholds. Borrower 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 hansfer of the Property) and shall wntinue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender determines that requirement will c�use undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall notify Lender of azry extenuating circumstances. Borrower 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 default. Lender may take re,asonable action to protect and preserve such vacant or abandoned Properiy. Borrower shall also be in default if Barrower, during the loan application process, gave materially false or �n�s��*a±P information or statements to I.ender (or failed to provide Lender with azry material information) in connection 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 Instrument is on a leasehold, Borrower shall comply with the provisions of the lease. If Borrower acquu�es fee tide to the Property the leasehold and fee tifle shall not be merged unless Lender agrees to the merger in writing. 6. Condemnetion. The procceds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taldng of atry part of the Property, or for conveyaace in place of condemnation, are hereby assigned and shall be paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this Security Instrument. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security Instrument, first to azry delinquent amounts applied in the order provided in paragraph 3, and then to prepayment of principal. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments, wluch are referred to in paragraph 2, or change the amount of such payments. A� excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instzument shall be paid to the entity legally entifled 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 obligations on time directly to the entity which is owai the payment. If failure to pay would adversely affect Lender's inter�t in the Property, upon Lender's request Borrower shall promptly fiunish to Lender receipts evidencing these payments. If Borrower fails to make these payments or the payments rcquired 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 FHA Mortgage WITH MERSNE Reviwd 4/98 Amanded 7l04 � � VMP4NtNE111106).00 WoPoers Kluwar Flnerxiel Servida Page 4 ot 10 oi i°imiimoi si aimi�iii oiiiiiimm g�3306977140 0333 366 0410