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201211096 mortgage insurance premium to be paid b_y Lender to the Secretary, or(ii)a monthly cltarge instead of a mo�tgage insurance premium if tlris Secunty lnstmment is held b}-the Secretan, in a reasonable amount to be delcrmined by the Secretary, Except for the monthly charge by the Secretaq, lhese items are ca(led "Escrow Items" and the sums paid[o Lender are called "Escrow Funds." Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to excced the maximum amonnt that mav bc requircd for Borrower's escrow account nnder the Rcal Estate Scltlement Procedures Act of 1974, 12 U.S.C, Section 2601 et seq. and implemendng regulations, 24 CFR Part 350Q as they may be amended fmm lime to time ("RESPA"), cxcept that[he cushion or reserve perntitted by RESPA for unan(icipated disbursemenls or disbursemenls before the Borrowcr's paymenls are available in the account may- not be based on amounts due for the mortgage insurance premium. If the amourrts held by Lender for Escrow Items exceed[he amounts permitted to be held by RESPA, Lender shall account ro Borrok-cr for thc excess funds as required by RESPA. If the amounts of funds hcld bv Lender at anv time aze not sufficienl to pay the Escmw Items when due, Lender may notify the Borrowcr and require Boirower ro make up the shortage as peanitted bv RESPA. The Escrow Funds are pledged as additional securih for all sums secured by tlris Security InsWment. If Bonower[enders to Lender the full paymentof all such sums,Borrower s account shall be credited with the balance remaining for a11 installmentitems(a), (b), and(c)and airy morlgage insurance premium installmem ihat Lender has not becomc obligated to pay to the Secretary•,and Lender shall prompUy rcfund any excess funds to Boirower. Immediatelyprior to a foreclosnre salc of the Property or its acquisitionby Lender, Borroa�cr's account sliall be creditcd with any balance remaimng for all inslallmentsfor items(a), (b), and(c). 3. Applicationof Payments.All payments under paragraphs 1 aud 2 shall be applied by Lender as follows: First, to the mottgage insurance premium to be paid by Lcnder to the Secretary or to the monthly charge by the Secic4uy instcad of the monthly mortgage insurance premium; Seco to any ta�es, special assessments, leasehold payments or ground rems, and fire, flood and other hazard insurance premiums, as required; Third, to interest due under[he Note; Fourth to amortizaUon of the principal of the Note; and F9fth, to late charges due�nder the Note. 4. Fire, Floodand Other Hazard Insurance.Borrower shall insure all improvements on the Propeny, whether now in existence or subsequently erected, against any hazards, casualties,and contingencies, including fire, for which Lender requires insurancc. This insurance shall be maintained in the amounts and for the periods tha[Lender rcquires. Boirower shall also insure all improvemems on the Proper[5, whether now in existence or subsequently crected, against loss by floods lo the extent required hy thc Secretan�. All insurance sktall be carried with companics approved by Lendcr. The insurence policies and any renewals stiall be held by Lender and sliall include loss payable clauses in favor of, and in a form acceptable to, Lcnder. In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make pmof of loss if not made prompU}-by Borro«�er.Each insmance company wncerned is hereby authonzed and directed to make payment for such loss directly ro Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its opdon, either(a)to the reduction of the indebtedness under the Note and this Sccuriry lnstrument, first to any delinquent amounts applied in thc order in paregraph 3, and thcn to prepar•ment of principal,or(b)to the restoration or rcpair of the damaged Property. Am application of the pmceeds to the principal shall not exlend or postponc the due date of the FHq Deetl of TmsM1NE VMP 3 GBB V✓ulters Kluner Financial Services VMP4R(NE)(1105)00 Pepe 3 of 10