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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 maximum
<br /> amount that may be required for Borrower's escrow account under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C.
<br /> � 2601 et s� and implementing regulations, 24 CFR Part 3500, as they may be amended from time to time ("RESPA"), except
<br /> that the cushion or reserve permitted by RESPA for unanticipated disbursements or disbursements before the Borrower's
<br /> payments are available in the account may not be based on amounts due for the mortgage insurance premium.
<br /> If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender shall account
<br /> 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
<br /> pay the Escrow Items when due, Lender may notify the Borrower and require Borrower to make up the shortage as permitted by
<br /> RESPA.
<br /> The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If Borrower tenders
<br /> to Lender the full payment of all such sums, Borrower's account shall be credited with the balance remaining for all installment
<br /> items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the
<br /> Secretary, and Lender shall promptly refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property
<br /> or its acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments for items (a), (b),
<br /> and (c).
<br /> 3. Application of Payments. All payments under Paragraphs 1 and 2 shall be applied by Lender as follows:
<br /> First, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary
<br /> instead of the monthly mortgage insurance premium;
<br /> SeCOnd, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard
<br /> insurance premiums, as required;
<br /> Third, 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 hazards, casualties, and contingencies, including fire, for which Lender
<br /> requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall
<br /> also insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the
<br /> extent required by the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and
<br /> any renewals shall be held by Lender and shall include loss payable 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 make proof of loss if not made
<br /> promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss
<br /> directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by
<br /> Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to any
<br /> delinquent amounts applied in the order in Paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of
<br /> the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the
<br /> monthly payments which are referred to in Paragraph 2, or change the amount of such payments. Any excess insurance
<br /> proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid
<br /> 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 extinguishes the
<br /> indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br /> 5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
<br /> Application; LeasehOldS. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within
<br /> sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Properry) and shall
<br /> continue to occupy the Properry as Borrower's principal residence for at least one year after the date of occupancy, unless
<br /> Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are
<br /> beyond Borrower's control. Borrower shall notify Lender of any extenuating circumstances. Borrower shall not commit waste or
<br /> destroy, damage or substantially change the Properry or allow the Property to deteriorate, reasonable wear and tear excepted.
<br /> Lender may inspect the Property if the Properry is vacant or abandoned or the loan is in default. Lender may take reasonable
<br /> action to protect and preserve such vacant or abandoned Property. Borrower shall also be in default if Borrower, during the loan
<br /> application process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with any
<br /> material information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning
<br /> Borrower's occupancy of the Property as a principal residence. If this Securiry Instrument is on a leasehold, Borrower shall
<br /> comply with the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall not be
<br /> merged unless Lender agrees to the merger in writing.
<br /> 6. COndemnatiOn. The proceeds of any award or claim for damages, direct or consequential, in connection with any
<br /> condemnation or other taking of any part of the Property, or for conveyance in place of condemnation, are hereby assigned and
<br /> shall be paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this
<br /> Security Instrument. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security
<br /> Instrument, first to any delinquent amounts applied in the order provided in Paragraph 3, and then to prepayment of principal.
<br /> Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments, which are
<br /> referred to in Paragraph 2, or change the amount of such payments. Any excess proceeds over an amount required to pay all
<br /> outstanding indebtedness under the Note and this Security Instrument shall be paid to the entiry legally entitled thereto.
<br /> 7. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all
<br /> governmental or municipal charges, fines and impositions that are not included in Paragraph 2. Borrower shall pay these
<br /> obligations on time directly to the entity which is owed the payment. If failure to pay would adversely affect Lender's interest in
<br /> the Property, upon Lender's request Borrower shall promptly furnish to Lender receipts evidencing these payments.
<br /> If Borrower fails to make these payments or the payments required by Paragraph 2, or fails to perform any other covenants
<br /> and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in
<br /> the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and
<br /> pay whatever is necessary to protect the value of the Properry and Lender's rights in the Property, including payment of taxes,
<br />• hazard insurance and other items mentioned in Paragraph 2.
<br /> F5813.LMG (2/99) Page 2 of 5
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