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20120425 2. Monthly Payment of Taxes, Insurance and Other Charges. Borrower sha11 include in each monthly payment, together with the principal and interest as set forth in the Note and any late chazges, a sum for (a) t�es and special assessments levied or to be levied against the Property, (b) leasehold payments or ground rents on the Property, and (c) premiums for inswance required under pazagraph 4. In any year in which the Lender must pay a mortgage insurance premium to the Secretary of Housing and Urban Development (" Secretary"), or in any year in which such premium would have been required if Lender still held the Security Instrument, each monthly payment sha11 also include either: (i) a sum for the annual mortgage insurance premium to be paid by Lender to the Secretary, or (ii) a monthly chazge instead of a mortgage insurance premium if this Security Instrument is held by the Secretary, in a reasonable amount to be determined by the Secretary. Except for the monthly chazge by the Secretary, these items aze called "Escrow Items" and the sums paid to Lender are called "Escrow Funds." Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may be required for Bonower' s escrow account under the Real Estate Settlement Procedures Act of 1974, 12 U. S. C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500, as they may be amended from time to time ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated disbursements or disbursements before the Borrower' s payments are available in the account may not be based on amounts due for the mortgage insurance premium. If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender sha11 account to Bonower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any time aze not sufficient to pay the Escrow Items when due, Lender may notify the Bonower and require Borrower to make up the shortage as permitted by RESPA. The Escrow Funds are pledged as additional security for a11 sums secured by this Security Insttument. If Bonower tenders to Lender the full payment of all such sums, Borrower' s account sha11 be credited with the balance remaining for a11 installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and Lender sha11 promptly refund any excess funds to Bonower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower' s account sha11 be credited with any balance remaining for all installments for items (a), (b), and (c). 3. Application of Payments. All payments under paragraphs 1 and 2 sha11 be applied by Lender as follows: Fir to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premium; Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other ha�ard insurance premiums, as required; � to interest due under the Note; Fo to amortization of the principal of the Note; and Fi to late chazges due under the Note. 4. Fire, Flood and Other Hazard Insur�nce. Bonower sha11 insure a11 improvements on the Property, whether now in eacistence or subsequently erected, against any hazards, casualties, and contingencies, including fire, for which Lender requires insurance. This insurance sha11 be maintained in the amounts and for the periods that Lender requires. Bonower sha11 also insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All inswance sha11 be carried with companies approved by Lender. The insurance policies and any renewals sha11 be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, Lender. 2200263535 D V4NNE FHA Mortgage WITH MERS-NE Revised 4/98 Amend 7/04 VMP � VMP4NINE) (1105) Woltera Kluwer Financial Servicea � t�� Page 3 of 10 �