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1. Payment of Principal and Interest. Borrower shall pay when due the principal of, and interest on,
<br />the debt evidenced by the Second Note.
<br />2. Payment of Property Charges. Borrower shall pay all property charges consisting of property taxes,
<br />hazard insurance premiums, flood insurance premiums, ground rents, condominium fees, planned unit
<br />development fees, homeowner's association fees, and any other special assessments that may be required
<br />by local or state law in a timely manner, and shall provide evidence of payment to Lender, unless Lender
<br />pays property charges as provided for and in accordance with the Loan Agreement.
<br />3. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property,
<br />whether now in existence or subsequently erected, against any hazards, casualties, and contingencies,
<br />including, but not limited to, fire and flood, for which Lender requires insurance. Such insurance shall
<br />be maintained in the amounts, and for the periods that Lender requires; Lender has the discretion to
<br />increase or decrease the amount of any insurance required at any time provided the amount is equal to or
<br />greater than any minimum required by the Commissioner. Whether or not Lender imposes a flood
<br />insurance requirement, Borrower shall at a minimum insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against loss by floods to the extent required by the
<br />Commissioner. If the Lender imposes insurance requirements, all insurance shall be carried with
<br />companies approved by Lender, and the insurance policies and any renewals shall be held by Lender and
<br />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
<br />loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and
<br />directed to make payment for such loss to Lender, instead of to Borrower and Lender jointly. Insurance
<br />proceeds shall be applied to restoration or repair of the damaged Property, if the restoration or repair is
<br />economically feasible and Lender's security is not lessened. If the restoration or repair is not
<br />economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied
<br />first to the reduction of any indebtedness under the Second Note and this Security Instrument and then to
<br />the reduction of the indebtedness under the First Note and the First Security Instrument. Any excess
<br />insurance proceeds over an amount required to pay all outstanding indebtedness under the Second Note
<br />and this Security Instrument and the First Note and the First Security Instrument shall be paid to the
<br />entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that
<br />extinguishes the indebtedness, all right, title and interest of Borrower in and to insurance policies in
<br />force shall pass to the purchaser.
<br />4. 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
<br />Principal Residence after the execution of this Security Instrument and Borrower (or at least one
<br />Borrower, if initially more than one person are Borrowers) shall continue to occupy the Property as
<br />Borrower's Principal Residence for the term of this Security Instrument.
<br />Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the
<br />Property to deteriorate, reasonable wear and tear excepted. Borrower shall also be in default if Borrower,
<br />during the loan application process, gave materially false or inaccurate information or statements to
<br />Lender (or failed to provide Lender with any material information) in connection with the loan
<br />evidenced by the Note, including, but not limited to, representations concerning Borrower's occupancy
<br />of the Property as a Principal Residence. If this Security 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
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