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3. Application of Payments. Unless applicable law provides otherwise, all payments received by Lender under
<br />paragraphs 1 and 2 shall be applied: first, to any prepayment charges due under the Note; second, to amounts payable under
<br />paragraph 2; third, to interest due; fourth, to principal due; and last, to any late charges due under the Note.
<br />4. Charges; Liens. Borrower shall pay all taxes, assessments, charges, fines and impositions attributable to the Property
<br />which may attain priority over this Security Instrument, and leasehold payments or ground rents, if any. Borrower shall pay
<br />these obligations in the manner provided in paragraph 2, or if not paid in that manner, Borrower shall pay them on time directly
<br />to the person owed payment. Borrower shall promptly furnish to Lender all notices of amounts to be paid under this paragraph.
<br />If Borrower makes these payments directly, Borrower shall promptly furnish to Lender receipts evidencing the payments.
<br />Borrower shall promptly discharge any lien which has priority over this Security Instrument unless Borrower: (a) agrees in
<br />writing to the payment of the obligation secured by the lien in a manner acceptable to Lender; (b) contests in good faith the lien
<br />by, or defends against enforcement of the lien in, legal proceedings which in the Lender's opinion operate to prevent the
<br />enforcement of the lien; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to
<br />this Security Instrument. If Lender determines that any part of the Property is subject to a lien which may attain priority over
<br />this Security Instrument, Lender may give Borrower a notice identifying the lien. Borrower shall satisfy the lien or take one or
<br />more of the actions set forth above within 10 days of the giving of notice.
<br />5. Hazard or Property Insurance. Borrower shall keep the improvements now existing or hereafter erected on the
<br />Property insured against loss by fire, hazards included within the term "extended coverage" and any other hazards, including
<br />floods or flooding, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods
<br />that Lender requires. The insurance carrier providing the insurance shall be chosen by Borrower subject to Lender's approval
<br />which shall not be unreasonably withheld. If Borrower fails to maintain coverage described above, Lender may, at Lender's
<br />option, obtain coverage to protect Lender's rights in the Property in accordance with paragraph 7.
<br />All insurance policies and renewals shall be acceptable to Lender and shall include a standard mortgage clause. Lender
<br />shall have the right to hold the policies and renewals. If Lender requires, Borrower shall promptly give to Lender all receipts of
<br />paid premiums and renewal notices. In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender.
<br />Lender may make proof of loss if not made promptly by Borrower.
<br />Unless Lender and Borrower otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the
<br />Property damaged, if the restoration or repair is economically feasible and Lender's security is not lessened. If the restoration or
<br />repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the sums
<br />secured by this Security Instrument, whether or not then due, with any excess paid to Borrower. If Borrower abandons the
<br />Property, or does not answer within 30 days a notice from Lender that the insurance carrier has offered to settle a claim, then
<br />Lender may collect the insurance proceeds. Lender may use the proceeds to repair or restore the Property or to pay sums
<br />secured by this Security Instrument, whether or not then due. The 30 -day period will begin when the notice is given.
<br />Unless Lender and Borrower otherwise agree in writing, any application of proceeds to principal shall not extend or
<br />postpone the due date of the monthly payments referred to in paragraphs 1 and 2 or change the amount of the payments. If under
<br />paragraph 21 the Property is acquired by Lender, Borrower's right to any insurance policies and proceeds resulting from
<br />damage to the Property prior to the acquisition shall pass to Lender to the extent of the sums secured by this Security Instrument
<br />immediately prior to the acquisition.
<br />6. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application;
<br />Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the
<br />execution of this Security Instrument and shall continue to occupy the Property as Borrower's principal residence for at least one
<br />year after the date of occupancy, unless Lender otherwise agrees in writing, which consent shall not be unreasonably withheld,
<br />or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall not destroy, damage or impair
<br />the Property, allow the Property to deteriorate, or commit waste on the Property. Borrower shall be in default if any forfeiture
<br />action or proceeding, whether civil or criminal, is begun that in Lender's good faith judgment could result in forfeiture of the
<br />Property or otherwise materially impair the lien created by this Security Instrument or Lender's security interest. Borrower may
<br />cure such a default and reinstate, as provided in paragraph 18, by causing the action or proceeding to be dismissed with a ruling
<br />that, in Lender's good faith determination, precludes forfeiture of the Borrower's interest in the Property or other material
<br />impairment of the lien created by this Security Instrument or Lender's security interest. Borrower shall also be in default if
<br />Borrower, during the loan application process, gave materially false or inaccurate information or statements to Lender (or failed
<br />to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited
<br />to, representations concerning Borrower's occupancy of the Property as a principal residence. If this Security Instrument is on a
<br />leasehold, Borrower shall comply with all the provisions of the lease. If Borrower acquires fee title to the Property, the
<br />leasehold and the fee title shall not merge unless Lender agrees to the merger in writing.
<br />7. Protection of Lender's Rights in the Property. If Borrower fails to perform the covenants and agreements contained
<br />in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a
<br />proceeding in bankruptcy, probate, for condemnation or forfeiture or to enforce laws or regulations), then Lender may do and
<br />pay for whatever is necessary to protect the value of the Property and Lender's rights in the Property. Lender's actions may
<br />Form 3028 9/90
<br />159006NE - 07/26/1999 [00200001 12091 Page 3 of 7 Initials: C- 6
<br />RG
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