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<br />1. Payaaast of Priaelpt. Inform and Late CMarge. Borrower shall pay when due the principal of. and interest on, the debt
<br />eviden oti by the Note and late charges due under the Note.
<br />2, Monthly Payserals of Tam. 1 aaatasn and UtlwCharges. Borrower shall include in each monthly payment, together with
<br />the principal and interest as sit for:4 lit the Note and any late charges, an Installment of any (a) tames and special assessments
<br />levied or to be levied against the Property, (b) lewhold payments or ground rents on the Property, and (c) premiums for
<br />Insurance required by Paragraph 4.
<br />Each monthly installment for items (a). (b) and (c) shall equal one - twelfth of the annual amounts. as reasonably estimated by
<br />Lender. plus an amount sufficient to maintain an additional balance of not more than one -sixth of the estimated amounts. The
<br />full annual amount for each item x W be accumulated by Lender within a period ending one month before an item would
<br />become delinquent. Lender shall hold the amounts collected in trust to pay items (a), (b) and (c) before they become delinquent.
<br />If at any time the total of the payments held by Lender for items (a), (b), and (c), together with the future monthly payments
<br />for such nests payable to Lender prior to the due dates of such items, exceeds by more than one -sixth the estimated amount of
<br />payments required to pay such items when due, and if payments on the Note are current, then Lender shall either refund the
<br />excess over one - sixth of the estimated payments or credit the excess over one -sixth of the estimated payments to subsequent
<br />payinems by Borrower. at the option of Borrower. If the total of the payments made by Borrower for item (a), (b), or (c) is
<br />Insufficient to pay the item when due, then Borrower shall pay to Lender any amount necessary to make up the deficiency on or
<br />before the date the item becomes due.
<br />As used in this Security Instrument. -Secretary" means the Secretary of Housing and Urban Development or his or her
<br />designee. Most Security Insminimis insured by the Secretary arc insured under programs which require advance payment of the
<br />entire mortgage insurance premium. If this Security Instrument is or was insured under a program which did not require advance
<br />payment of the entire mortgage insurance premium, then each monthly payment shall also include either: (i) an installment of the
<br />annual mortgage insurance premium to be paid by Lender to the Secretary, or (ii) a monthly charge instead of a mortgage
<br />huunmce premium if this Security Instrument is held by the Secretary. Each monthly installment of the mortgage insurance
<br />premium dwH be,irA an amount sufficient to accumulate the full annual mortgage insurance premium with Lender one month
<br />prior to the date she M annual mortgage insurance premium is due tos *,c Secretary, or if this Securirt; Instrument is held by the
<br />Secretary, each monthly charge shall be in an amount *quad to one- tWedih of one -half percent wf the outstanding principal
<br />balance due on the Note.
<br />If Borrower tenders to Lender !the full payment of all suons secured by this Security Instrument, B©nower's account shall be
<br />credited with the balance remaking for all installments for items (a),• (b) and (c) and any mor.ilrage Insurance premium
<br />installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to
<br />Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender. Borrower's account shall be
<br />credited with any Wane remaining for all installments for items (a), (b) and (c).
<br />31, A.001MOM of liblrauents. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />EM. 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 mointhiy mortgage insurance premium, unless Borrower paid the entire mortgage insurance premium when this
<br />Security lastrurnew was signed;
<br />SECOND. to any taxes, special asses meats, leasehold payments or ground rents, and fire, flood and other hezard insurance
<br />premiums, as required;
<br />T,HI , to interest due under the Note;
<br />MURTH. to amortization of the principal of the Note;
<br />FIrrH, to late charges due under the Note.
<br />d. Fire, Flood and Otter Hanrd less mace. Borrower shall insure all improvements on the Property, whether now in existence
<br />or subsequently erected, against any hazards, casualties, and contingencies, including lire, for which Lender requires insurance.
<br />This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all
<br />improvements on the Property, whether now in existence or subsequently erected, against loss by flood,: to the extent required by
<br />the Secretary. All Insurance shall be carried with companies approved by Lender. The insurance polica:5 and any renewals shall
<br />be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, ".— der.
<br />In the event of loss. Borrower shag give Lender immediate notice by mail. Lender may make proof of loss if not made prompt-
<br />ly by'Sorrower• Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to
<br />Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its
<br />option, either (a) to the reduction of the ia.ckbtedness under the Note and this Security Instrument, first to any delinquent
<br />amounts applied in the order in Paragraph .4. and then to prepayment of principal. or (b) to the restoration or repair of the
<br />damaged property. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly
<br />payments which am referred to in Paragraph 2. or change the amount of such payments. Any excess insurance proceeds over an
<br />amount required to pay W outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legal-
<br />ly entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Propeny that extinguishes the in-
<br />debtedness. all righi, title and Interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br />S. Preservation read Malatetusce of the Properly. Lsaaebolds. Borrower shall not commit waste or destroy, damage or
<br />subuandally change the Property or allow the Property to deteriorate. reasonable wear and tear excepted. Lender may inspect
<br />the property if the property is vacant or abandoned or the loan is in default. Lender may take reasonable action to protect and
<br />preserve such vacant or abandoned property. If this Security Instrument is on a leasehold. Borrower shwil comply with the provi•
<br />sions of the lease.. If Borrower acquires fog tur.;t auto the Property. the leasehold and fee title Asali aw be merged unless Lender
<br />agrees to the merger in writing.
<br />ti. CMW to Borrower and Proteelloa of Leader's Rights in dw Property. Borrower shall pay all governmenuat or municipal
<br />i charges. toms am impositions that ate not included in Paragraph 2. Borrower shall pay these obligations on time directly to the
<br />entity which is oived the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lender's re-
<br />quest Borrower shall promptly furnish to Lender receipts evidencing these payments.
<br />It Borrower fails to make these
<br />payments or the payments required by Paragraph 2, or fails to perform any other covenants and
<br />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)i, then Lender may do and
<br />pay whatever h necessary to protect the value of the Property and Lender's rights in the Properry, including payment of taxes,
<br />hazard insurance and other items mentioned in Paragraph 2.
<br />Any amounts disbursed by lender under this Paragraph shall become an additional debt of Borrower and he secured by this
<br />Security Instrument. These amounts shall bear interest from the date of disbursement. at the Note rate, and at the option of
<br />Lender. shall be immediately due and payable.
<br />Z. Catdeasaatioa. The proceeds of any award or claim for damages, direct or consequential, in connection with any condem.
<br />n&iea or other taking of any part or the Property, or for conveyance in place of condemnation, are hereby assigned and shall be
<br />Paid to Leader to the extent of the full amount of the indebtedness that remains unpaid under the Note and this Security Imtru.
<br />I , I . Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Swunly Instrument, first to
<br />any delinquent amounts applied in the order provided in Paragraph ), and then to prepayment of principal. Any application of
<br />the proceeds to the principal shall not extend or postpone the due date of the monthly payments, %hick are referred to to
<br />Paragraph 2. or change the amount of such payments. Any excess proceeds over an amount required to pay all outmandin$ to
<br />debtedneu under the Note and this Security Instrument shall be paid to the entit% legally entitled thereto.
<br />g. Fees. Lender may collect fees and shames authorized by the tiecretary
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