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20010515'7 BORROWEWOVENANT3hat Borroweris lawfully seised of the estateherebyconveyedand has the right to grantand conveythe Propertyand thatthe Propertyis unencumberedpxceptfor encumbrances of record. Borrowerwarrants and will defend generallythe title to the Property against all claims and demands, subject to any encumbrances of record. THIS SECURITYINSTRUMENTcombines uniform covenantsfor national use and non - uniform covenantswith limited variationsby jurisdictionto constitutea uniform security instrumentcovering real property. UNIFORMCOVENANTS Borrowerand Lendercovenantand agree as follows: 1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges. Borrowershall pay when due the principal of, and interest on, the debt evidencedby the Note and any prepaymenlchargesand late charges due under the Note. Borrowershall also pay funds for Escrow items pursuantto Section 3. Paymentsdue under the Note and this Security Instrumentshall be made in U. S. currency.However,if any check or otherinstrumentreceivedby Lenderas paymentunderthe Note or this Securityinstrumentis returnedto Lenderunpaid, Lendermay requirethat any or all subsequentpayments due under the Note and this Security Instrumentbe made in one or more of the following forms, as selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's check or cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer. Paymentsare deemedreceivedby Lenderwhen receivedat the location designatedin the Note or at such otherlocationas may be designatedby Lenderin accordancewith the noticeprovisionsin Section 15. Lendermay return any paymentor partial paymentif the paymentor partial paymentsare insufficientto bring the Loan current. Lendermay acceptany paymentor partial paymentinsufficientto bring the Loan current,withoutwaiver of any rights hereundetor prejudiceto its rights to refuse such paymentor partial paymentsin the future, but Lenderis not obligatedto apply such paymentsat the time such paymentsare accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay intereston unappliedfunds. Lendermay hold such unappliedfunds until Borrowermakespaymentto bring the Loan current. If Borrowerdoes not do so within a reasonableperiodof time, Lendershall eitherapply such funds or returnthemto Borrower.If not appliedearlier,such funds will be appliedto the outstanding principal balance under the Note immediatelyprior to foreclosure. No offset or claim which Borrower might have now or in the future against Lendershall relieve Borrowerfrom making paymentsdue under the Note and this Securitylnstrumentor performingthe covenantsand agreement$ecuredby this Security Instrument. 2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all paymentsacceptedand appliedby Lendershall be appliedin the following order of priority: (a) interest due under the Note; (b) principal due under the Note; (c) amountsdue under Section 3. Such payments shall be appliedto each Periodic Paymentin the order in which it becamedue. Any remainingamounts shall be appliedfirst to late charges, second to any other amountsdue underthis SecurityInstrument,and then to reduce the principal balance of the Note. If Lenderreceives a paymentfrom Borrowerfor a delinquentPeriodic Paymentwhich includes a sufficient amountto pay any late charge due, the paymentmay be appliedto the delinquentpaymentand the late charge. If more than one Periodic Paymentis outstanding,Lendermay apply any paymentreceived from Borrowerto the repaymentof the Periodic Paymentsif, and to the extentthat, each paymentcan be paid in full. To the extentthat any excess exists after the paymentis appliedto the full paymentof one or more Periodic Payments,such excess maybe appliedto any late chargesdue. Voluntaryprepayment$ hall be applied first to any prepayment charges and then as described in the Note. Any applicationof payments,insuranceproceeds,or MiscellaneousProceedsto principal due under the Note shall not extend or postpone the due date, or change the amount, of the Periodic Payments. 3. Funds for Escrow Items. Borrowershall pay to Lenderon the day Periodic Paymentsare due under the Note, until the Note is paid in full, a sum ( the "Funds ") to provide for paymentof amountsdue for: (a) taxes and assessmentsand other items which can attainpriority over this Security Instrumentas a lien or encumbranceon the Property; (b) leaseholdpaymentsor ground rents on the Property, if any; (c) premiums for any and all insurance required by Lender under Section 5; and (d) Mortgage Insurance Initials:" dM - 6A(NE) (0005) Page 4 of 15 Form 3028 1/01 OD