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<br />1, Paynaeot of Prisclpal. lattrest ad late Cllaete Borrower shrill pay when due the principal of, and interest on, t e ebt �;,T..•,
<br />evidenced by the Note and late charges due under the Note.
<br />1, Moatldir Paymeata of Taxes. lawfl ate nad Otlar Charges. Borrower shall include in each monthly payment, together with
<br />t he principal and interest as set forth in the Note and any late charges, an installment of any (a) taxes and special asseuments
<br />levied or to be levied against the Property, (b) leasehold payments or ground rents on the Property, and (c) premiums for
<br />insurance required by Paragraph 4.
<br />Each amonthly installment for ;toms (a), (b) and (c) shall equal one - twelfth of the annual amounts, as reasonably estimated by
<br />Lender, plus an amount suffick.it 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 sterns (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, than 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 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 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 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: (1) an installment of the
<br />eaanual mortgage insurance premium m be paid by Lender to the Secretary, or (iii) 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 rretnium with Lender one month
<br />prior to the date the full annual mortmage insurance premium is due to the Secretary. or if this Security Instrument is held by the
<br />Secretary, each monthly charge shall be in an amount equal to one - twelfth of one -half 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. Borrower's account shall be
<br />credited with the balance remaining for all installments for items (a), (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 to
<br />Borrower. Immediately prior to a foreclosure sate of the Property or its acquisition by Lender, Borrower's account shall be
<br />credited with any balance remaining for all installments for items (a), (b) and (c).
<br />3. Applleadoa of Paymeats. All payments under paragraphs 1 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 (he Secretary
<br />instead of site (iwtrihly mortgage insurance pr-.mium, unless Borrower paid the entire mortgage insurance premium when this
<br />Security Instrument was signed;
<br />SMIN , to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance
<br />premiums, as required;
<br />+ BIRD, to interest due under the Note;
<br />I OURT , to amortization of the principal of the Note;
<br />i FIFTH. to late charges due under the Note.
<br />4. Fire. Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property, whether now in existence
<br />or subsequently erected, against any hazards, casualties, and contingencies, including fire, for which Lender requires insurance.
<br />I 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 floods to the extent required by
<br />the Secretary. All 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) m the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent
<br />! amounts applied in the order in Paragraph 3, 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 />payrnmts which are referred to in Paragraph 2, 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 this Security Instrument shall be paid to the entity legal-
<br />ly entitled thereto.
<br />In the event of foreclosure oY 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. Preservation and Maintenance of the Property. Leaseholds. Borrower shall not commit waste or destroy, damage or
<br />substantially 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 />c' • preserve such vacant or abandoned property. If this Security Instrument is on a leasehold. Borrower shall comply with the PTovi-
<br />slons of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall not be merged unless Lender
<br />agrees to the merger in writing.
<br />i 6. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all governmental or municira!
<br />charges. fines and impositions that are not included in Paragraph 2. Borrower shall pay these obligations on time directly t the
<br />entity which is owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Londe: 's -e-
<br />quest Borrower %hail promptly' furnish to Linde: receipts evidencing these r- ment>.
<br />If Borrower faits to make these payment+ oT the payments required by Paragmiph Z. 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 tares,
<br />t hazard insurance and other items mentioned in Paragraph 2.
<br />Any amounts disbursed by lender under ems Paragraph shaii become an addintmed deli .;f 96P r, -_Z; ...... ;c:...
<br />security Instrurniem. 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 />t 7. Condemnation. The proceeds of any award or claim for damages, direct or can egrlertr.al„ in connection with any condem-
<br />nation or other taking of any pan of the Property, or for conveyance in place of are hereby assigned and shall be
<br />p ment. Lender shalt apply such proceeds to the reducaid to Lender to the extent of the full amount of the indebtedness that remains linpatd under the Note and this Security Instru-
<br />tton 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 applicatton 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 />8. Fees. Lender may collect fees and charges authorized by the Secretary.
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