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<br />Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the
<br />maximum amount that may be required for Borrower's escrow account under the Real Estate Settlement Procedutes
<br />Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing regularions, 24 CFR Part 3500, as they ma.y be
<br />amended from time to time ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated
<br />disbursements or disbursements before the Bonower' s payments aze available in the account may not be based on
<br />amounts due for the mortgage inswance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender
<br />shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any
<br />time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrower and require Borrower to
<br />make up the shortage as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If
<br />Borrower tenders to Lender the full payment of a11 such sums, Borrower's account sha11 be credited with the balance
<br />remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has
<br />not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Bonower.
<br />Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account sha11 be
<br />credited with any balance remaining for all installments for items (a), (b), and (c).
<br />3. Application of Payments. All payments under pazagraphs 1 and 2 sha11 be applied by Lender as follows:
<br />Fir to the mortgage insurance premium to be paid by Lender to the Secretaay or to the monthly chazge by the
<br />Secretary instead of the monthly mortgage insurance premium;
<br />Secon to any ta�ces, special assessments, leasehold payments or ground rents, and fire, flood and other hazard
<br />insurance premiums, as required;
<br />Thir to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against any ha�ards, casualties, and contingencies, including fire, for which
<br />Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender
<br />requires. Bonower sha11 also insure all improvements on the Property, whether now in existence or subsequently
<br />erected, against loss by floods to the extent required by the Secretary. All insurance sha11 be cazried with companies
<br />approved by Lender. The insurance policies and any renewals shall Ue held by Lender and shall include loss payable
<br />clauses in favor of, and in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may malce proof of loss if not
<br />made promptly by Bonower. Each insurance company concerned is hereby authorized and directed to make payment
<br />for such loss directly to Lender, instead of to Bonower and to Lender jointly. All or any part of the insurance
<br />proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and
<br />this Security Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment
<br />of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the
<br />principal sha11 not extend or postpone the due daYe of the monthly payments which are refened to in pazagraph 2, or
<br />change the amount of such payments. Any excess insurance proceeds over an amount required to pay a11 outstanding
<br />indebtedness under the Note and this Security Instrument sha11 be paid to the entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that e�ctinguishes
<br />the indebtedness, a11 right, title and interest of Borrower in and to insurance policies in force sha11 pass to the
<br />purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
<br />Leaseholds. Borrower shall occupy, establish, and use the Property as Bonower's principal residence within sixty
<br />days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property)
<br />and sha11 continue to occupy the Property as Bonower' s principal residence for at least one year after the date of
<br />occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless e�enuating
<br />circumstances exist which are beyond Borrower's control. Bonower shall notify Lender of any extenuating
<br />circumstances. Borrower sha11 not commit waste or destroy, damage or substantially change the Property or allow the
<br />Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant
<br />or abandoned or the loan is in default. Lender may take reasonable action to protect and preserve such vacant or
<br />12-09-404002
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