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10698 _
<br />Each monthly installment for items (a). (b►, and Ic) shall equal one- twelfth of the annual amounts, as reasonably estimated
<br />by Lender, plus an amount sufficient to maintain an additional balance of not more than jme -sixth of the estimated amounts.
<br />The Aril 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 collated in trust to pay items (a), lb), and (c) before they become delinquent.
<br />If at any time the total of the payments held by Lender for items (a). lb). 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
<br />of payments required to pay such items when due, and if payments on the Note are current, then Lender shall either refund
<br />the 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)
<br />is insufficient to pay the item when due, then Borrower shall pay to Lender any amount necessary to make up the deficiency
<br />on or 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
<br />the entire mortgage insurance premium. If this Security Instrument is or was insured under a program which did not require
<br />advance payment of the entire mortgage insurance premium. then each monthly payment shall also include either: (1) an installment
<br />of the annual nurvagage insurance premium to be paid by (.ender to the Secretary, or (ii) 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 shall be in an amount sufficient to accumulate the full annual mortgage insurance premium with Lender one month
<br />by the Secretit y� ch full onthly charge mortgage
<br />hall be in an amount equal to one-twelfth of one -half if
<br />percent of the outstanding Principal
<br />balance due on the Note.
<br />If Borrower tenders to Lender the full payment of all sums secured by this Security Instrument. Burrower's account shall
<br />be credited with the balance remaining for all installments for items la). (b), and (c) and any mortgage insurance premium
<br />installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds
<br />to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall
<br />be credited with any balance remaining for all installments for items (a), lb►, and (c).
<br />3. Applicatoon of Payments. All payments under paragraphs I and 2 shall be applied by Lender as follows:
<br />First. 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 />Second. to any taxes. special assessments. leasehold payments or ground rents. and fire, ftoud and other hazard insurance
<br />premiums, as required;
<br />Third, to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note;
<br />Fifth, tat late charges due under the Note.
<br />4. i ?ire. Flood and other Hazard Insurance. Borrower shall insure all improvements on the Property, whether now in
<br />existence or subsequently erected. against any hazards, casualties, and contingencies, including fire, for which Lender requires
<br />insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also
<br />Insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent
<br />required by the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and any
<br />renewals shall 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
<br />promptly by Borrower. Each insurance company concerned is hereby authorized and directc-1 to make payment for such loss
<br />directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied
<br />by Lender, a► its option. either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to
<br />any delinquent amounts applied in the order in Paragraph 3. and then to prepayment of principal, or (b) to the restoration
<br />or repair of the damaged property. Any application of the proceeds to the principal shall not extend or postpone the due date
<br />of the monthly payments which are referred to in Paragraph 2, or change the amount of such payments. Any excess insurance
<br />proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be
<br />paid to the entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the
<br />indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br />S. Preservation and Maintenance of the Prop►erty, Leaseholds. Borrower shall not commit waste or destroy, damage or
<br />substantially change the Property or allow the Propert ;, 1,3 deteriorate, reasonable wear and tear excepted. Lender may inspect
<br />the property if the property is vacant or abandoned or the loan i-, in default. Lender may take reasonable action to protect
<br />and preserve such vacant or abandoned property. If this Security Instrument is on a leasehold, Borrower shall comply with
<br />the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall nctl be merged unless
<br />Lender agrees to the merger in writing.
<br />6. (Climpes to Borrower and Protection of I. uda's (Rights in the ProperiF. Borrower shall pay all governmental or municipal
<br />charges, flues and Impositions thac an rani included in Paragrapb 2. Borrower shall pay ihese obligations on time directly to
<br />the entity which is owed the payment. If failure to pay would adversely affect Lender's inverem in the Property, upon Lender's
<br />request Borrower shall promptly furnish to Lender receipts evidencing these payments.
<br />If Borrower fails to make these payments or the payments required by Paragraph 2, or fails to perform any etcher covenants
<br />__.�.............,ao....,t in thtc c.urity Instrument. or there is a lexal proceeding that may significantly afTect 1Lenaler'. -fights
<br />a--, ay �....�..... ...........__ ......... -T
<br />in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), teen Lender may
<br />do and pay whatever is necessary to protect the value of the Property and Lender's rights in she Property, including payment
<br />of taxes, hazard insurance and other items mentioned in Paragraph 2.
<br />Any amounts disbursed by Lender under this Paragraph %hall become an additional debt of Borrower and be secured
<br />by this Security Instrument. These amounts shall bear interest from the date of disbursement. at the Note rate, and at the
<br />option of Lender, shall be immediately due and payable.
<br />7. Condemnation. The proceeds of any award or claim for damages. direct or Wa.ckw;�.Atlal, in connection with any
<br />condemnation or other taking of any part of the Property. or for conveyance in place of condemnacwt rt..are hereby assigned
<br />and shall be paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this
<br />Security Instrument. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security
<br />Instrument, first to any delinquent amounts applied in the order provided in Paragraph 3, and then to prepayment of principat.
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