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20120668� 2. Monthly Payment of 7axes, Insurance and Other Charges. Bonower sha11 include in each monthly payment, together with the principal and interest as set forth in the Note and any late charges, a sum for (a) taxes and special assessments levied or to be levied against the Property, (b) leasehold payments or ground rents on the Property, aad (c) premiums for insurance 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 preznium 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 charge instead of a mortgage insurance premium if this Security Instrument is held by the Secretary, in a reasonable amount to be determined by the Secretaty. Except for the monthly chazge by the Secretary, these items are called "Escrow Items" and the sums paid to Lender are called "Escrow Funds." Lender may, at any time, colle�t and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may be requited for Bonower's escrow account under the Rea1 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 tune ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated disbursements or disbursements before the Borrower's payments aze 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 shalt account to Bortower for the excess funds as r�uired by RESPA. If the amounts of funds held by Lender at aay time are not sufficient to pay the Escrow Items when due, Lendec 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 all sums secured by this Security Instrument. If Borrower tenders to Lender the full payment of a11 such sums, Bonower' 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 shall promptly refund any excess funds to Bonower. Immediately prior to a foreclosure sale of the Propetty or its acquisirion by Lender, Borrower's account shall be credited with any balance remaining for all installments for items (a), (b), and (c). 3. ApplPcation of Payments. All payments under paragraphs 1 and 2 sha11 be applied by Lender as follows: First 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 iasutance premium; Secon to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premivms, as required; Third, to interest due under the Note; Fourth. to amortization of the principal of the Note; and Fift to late charges due under the Note. 4. Flre, Flood and Other Hazard Insurance. Bonower shall insure a11 improvements on the Property, whether now in eacistence or subsequently erected, against any har�a�ds, 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 shall also insure a11 improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretazy. All insurance 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 accepfa,ble to, Lender. 7116461836 FHA Mortgege WITH MHiS-NE Reviaed 4/96 VMP p VA1P4N{Nq (1109) WoNers Kluw er Flnancial Servlc� Page 3 of 1 Q