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201208107 2. Monthly Payment of Taxes, Insuranceand Other Charges.Borrower shall i❑clude in each monthly payment,togcther with the principal and intcrest as set forth in the Note and any latc charges, a sum for (a)taxes and special assessments lcvied o�to bc Icvied against thc Property, (b)leasehold payme�ts or ground rents on the Property,and (c)premiums for insurance required under paragraph 4. In any year in which the Lender must pay a mortgage insurance premium to the Secretary of Housing and Urbau Developmcnt("Secretary"), or in any year in which such premium would have been required if Lcnder still held the Security Instrumcn[, each monthly payment ahxll also includc cither. (i)a sum for the annual mortgage insnrance p�emium to be paid by Lender to the Secretary, or(ii)a monthly charge instead of a mortgage insurance premium if this Security Instniment is held by the Secretary, in a reasonable amonnt to be dctermined by the Secrctary. Except for the monthly chargc by the Secretary, these items arc called "Lscrow Items" and the sums paid to Lcnder are callcd "Escrow Funds." Lender may, at any time,collect and hold a�uoun[s for Escrow Items in an aggregate amount not W exceed the maximum amount that may be required tor Bonower's escrow accouut under the Real Lstate Settlement Procedures Act of 1974, 12 U.S.C. Section 2601 ea seq. and implementing regulations, 24 CFR Part 3500, as thcy may be amcnded from time to time("RESPA"), except that the cushion o�reserve permitted by RESPA for unanticipxtcd disburscments or disbursements beforo the Borrower's payments are available in the account may not be based on amounts due for the mortgage inswance prcmium. If the amounts held by Lender for Lscrow Items exeeed the amounts permittcd to be held by RCSPA, Lender shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any time arc not sufficicnt to pay thc Escrow Items when due,Lendcr may notify the Borrowcr and require Borrower to make up the shortage as permitted by RESPA. The Escrow Funds aze pledged as additional security fo�all sums secured by this Secwity Instrument. If Borrower tcndcrs to Leiidcr the fidl payment of all such sums, Bonower's account shall be credited with the balance remaining for all installmcnt items(a), (b),and (c)and any mortgagc insurance premium installment that Lender has not become obligafed to pay to the Secretary, and Lender shall promptly refund any cxcess funds to Borrower. Immediately prior to a foreclosnre sale of the Property or its acquisition by Lender, Borrowcr s account shall be credited with any balance�emainiug for all installments for items(a), (b), and(c). 3. AppllCatlonof PaymentB.All payments under para},�raphs 1 and 2 shall be applicd by Lender as follows: First, to the mortgage insurance premium to be paid by Lendcr to the Secretary or to the monthly chargc by the Secretary instead of the monthly mortgage insurance premium; ond, to auy taxes, special assessments, leasehold paymcnts or ground rents, and fire, tlood and o[her hazard insurance premiums,as required; Thir , to interest due under the Note; Fourth, to amodization of the principal of the Note; and Fifth, to late charges due under the Note. 4. Fire, Floodand Other Hazard Insuranee.Borrowcr shxll insure all improvements on the Property, whether now in existence or subsequently crected, against any hazards, casualties,and contingencies, including fire, for which Lendcr requires insurance. This insurance shall be maintained in the amounts and for thc periods that Lender requires. Borrower shall also insure all improvements on the Propedy, whether ❑ow in existence or subsequently erected,against loss by floods to the extcnt required by the Secretary. All insurance shall be carried with companies approved by Lender. Thc insurance policics and any rencwals shall be hcld by Lcnder and shall include Ioss payable clauses in favor of. and in a form acceptable to,Lender. FHAMortgageWITHMERS-NE III IIII"IIIIIIIIIIIII'IIIIIIIIIII IIIIIIIIIIIIIII f(� Re9sed4196 VMP�' VMP4N(NE)�1109).00 WOItersKluwerFlnancialServir.es Pa e3of10 q03309003832 0233 373 0310