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2Q1205040 If the amountg held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrower a.nd require Bortower to make up the shortage as permitted by RESPA. The Escrow Funds are pledged as additional security for all sums secured by this Security Inshumen� If Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance remaining for all 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 shall promptly refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisitionby Lender, Borrower's account shall 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 shall be applied by Lender as follows: Firs 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; Secon to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as required; Third, to interest due under the Note; Fou to amortization of the principal of the Note; and Fi to late chaxges due under the Note. 4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all unprovements on the Property, whether now in existence or subsequently erected, against any hazards, casualties, and contingencies, including fire, for which Lender requires insurance. This insurance shall be maintained in the a.mounts and for the periods that Lender requires. Borrower shall 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 insurance sha11 be carried with companies approved by Lender. 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, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Inshument, first to any delinquent amounts applied in the order in Paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments which are refeaed to in Paragraph 2, or chauge the amount of such payments. Any excess i.nsurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument sha.11 be paid to the entity legally entitled thereto. HCFG-00703 FHA Deed of Trust NE ' Revbed 4/96 VMP� 01/12 Woiters Kluwer Fnancial Services 201206184.7.1.2336-J20120129Y Page 3 of 10 1 3 1 8'