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<br />L Paymml err !droll, INWOM cunt Lolls Ci►arle. Borrower shall pay when due the principal of, and interest on, the debt
<br />evidenced by the Note and late charges due under the Note.
<br />2. MOM* hymets of Taaa h IttwrUM asst ONav Ciiaryu. Borrower shall include in each monthly payment, together with
<br />the principal and interest as set forth in the Note and any late charge•., an installment of any (a) taxes and special assessments
<br />levied or to be levied agalast the Property, (b) katehold payments or ground rents on the Property, and (c) premiums for
<br />insurance tcQul1W i �a+�Fh 4.
<br />Each monthly installment for item (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 shall 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 items 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 />payments 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 makeup 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 Instruments insured by the Secretary are insured under programs which require advance payment of the
<br />entire mortgage insurance premium. If this Security Instrument is or was ittsured 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 isstaWnent of the
<br />annual mortgage [asurance premium to be paid by Lender to the Secretary. or (it) a monthly charge instead of a mortgage
<br />Insurance premium if this Security Instrument is held by the Secretary. Each monthly installment of the mortgage insurance
<br />premium s8stS1 be in an amount sufficiem to accumulate the full annual mortgage insurance premium with Lender one month
<br />prior to the elate the full anaval mortgage k*vrance premium is due to the Secretary. or if this Security Instrument is held by the
<br />Secretary. each monthly cbaw. shall be in an amount equal to one - twelfth of one -half percent of the outstanding principal
<br />balance due on the Note.
<br />U Borrower tenders to LelLwer the full payment of all sums secured by this Security Orrstrument. Borrower's account shalt be
<br />v:aited with the balance remaining for all installments for items (a). (b) and (c) and any mortgage insurance premium
<br />=uUment 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 a,quisition by Lender. Borrower's account shalt be
<br />credited with any balance remaining for all installments for items (a). Qbp and (c).
<br />3. Appilleaties of Faymeab. All payments under paragraphs I 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 monthly mortgage insurance premium, unless Borrower paid the entire mortgage insurance premium when this
<br />Security Instrument was signed;
<br />. SE CO 1 , to any taxes. special assessments, leasehold payments or gcotuxd rents, and rite, flood and other ba=d insurarce
<br />premiums. as required;
<br />THIRD, to interest due under the Note;
<br />FOURTH, to amortization, of the principal of the Nato,
<br />jam, to late charges due under the Note.
<br />i. Fire, Fkya i a o ormt naoM- 11[amrawle. Botm:•zr sAail in;st : aiI min v- ement» on the Property. whether now in existence
<br />or subsequently erected. against any hazards, casualties, and contingesicn s. including fire, for which Lender requires insurance.
<br />This insurance shall be maintained in the amounts and for the periods that Leader requires. Borrower shall also insure all
<br />improvements on the Property, whether now in existence or subsequently erected. against loss by floods to the extent required by
<br />the Secretary. AB insurance shall be carried with companies approved by Lender. The insurance policies and any renewals shall
<br />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 prompt-
<br />ly by Borrower. 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 indebtedness under the Note and this *udty Instrument. first to any delinquent
<br />amounts applied in the other in Paragraph 3. and them av prepayment of principal, or (b) to the restoration or repair of the
<br />damaged property. Any application of the proceeds to ay. principal shall not exttgd or postpone the due date of the monthly
<br />payments which are referred to in Paragraph 4 or change the amount of such payments- Any excess insurance proceeds over an
<br />amount required to pay all outstanding indebtedness under the Note and Ais 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 Property that extinguishes the in-
<br />debtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br />S. Prele udon and Maiatettaate of the Property, Lcasehokls. Borrower shall not commit waste of destroy, damage or
<br />substantiaky chmge 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 shall comply wiiJi zhe provi-
<br />sions of the lease. if Borrower acquires fee title to the Property. the leasehold and fee title shall not be merged unEms Lender
<br />agrees to the merger in writing.
<br />;tss Borrower sad Protection of Lender's Rights in the Property. Borrower shall pay all governmental or municipal
<br />diaper, 4imm and impositions that are not included in Paragraph 2. Borrower shalt pay these obligations on time directly to the
<br />entity which is owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon bender's re-
<br />quest Borrower shall promptly fumish to Lender receipts evidencing these payments.
<br />If Borrower fails to wake these payments or the paymoits. 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), then Lender may do and
<br />pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, 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 be 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 />7. Coodesaatfon. The proceeds of any award or claim for damages, direct or consequential, in connection with any condem-
<br />nation or other taking of any part of the Property, or for conveyance in place of condemnation, are hereby assigned and shall be
<br />paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this Security Instru-
<br />ment. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security Instrument, first to
<br />any delinquent amounts applied in the order provided in Paragraph 3. 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, which are referred to in
<br />Paragraph 2. or change the amount of such payments. Any excess proceeds over an amount required to pay all outstanding in-
<br />debtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.
<br />d. Fees. Lender may collect fees and charges authorized by the Secretary.
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