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<br />2. Funds for Taxes and Insurance. Subject to applicable law, Lender, at Lender's option, may
<br />require Borrower to pay to Lender on the day monthly payments of principal and finance charges are
<br />payable under the Credit Agreement, until all sums secured by this Security Instrument are paid in full, a
<br />sum (herein "Funds") equal to one -twelfth of the yearly taxes and assessments (including condominium
<br />and planned unit development assessments, if any) which may attain priority over this Security
<br />Instrument, and ground rents on the Property, if any, plus one -twelfth of yearly premium installments for
<br />hazard insurance and flood insurance, if applicable, all as reasonably estimated initially and from time to
<br />time by Lender on the basis of assessments and bills and reasonable estimates thereof. Borrower shall
<br />not be obligated to make such payments of Funds to Lender to the extent that Borrower makes such
<br />payments to the holder of a prior mortgage or deed of trust if such holder is an institutional Lender.
<br />If Borrower pays Funds to Lender, the Funds shall be held in an institution the deposits or accounts
<br />of which are insured or guaranteed by a Federal or state agency (including Lender if Lender is such an
<br />institution). Lender shall apply the Funds to pay said taxes, assessments, insurance premiums and
<br />ground rents. Lender may not charge for so holding and applying the Funds, analyzing said account or
<br />verifying and compiling said assessments and bills, unless Lender pays Borrower interest on the Funds
<br />and applicable law permits Lender to make such a charge. Borrower and Lender may agree in writing at
<br />the time of execution of this Security Instrument that interest on the Funds shall be paid to Borrower, and
<br />unless such agreement is made or applicable law requires such interest to be paid, Lender shall not be
<br />required to pay Borrower any interest or earnings on the Funds. Lender shall give to Borrower, without
<br />charge, an annual accounting of the Funds showing credits and debits to the Funds and the purpose for
<br />which each debit to the Funds was made. The Funds are pledged as additional security for the sums
<br />secured by this Security Instrument.
<br />If the amount of the Funds held by Lender, together with the future monthly installments of Funds
<br />payable prior to the due dates of taxes, assessments, insurance premiums and ground rents, shall exceed
<br />the amount required to pay said taxes, assessments, insurance premiums and ground rents as they fall
<br />due, such excess shall be, at Borrower's option, either promptly repaid to Borrower or credited to Borrower
<br />on monthly installments of Funds. If the amount of the Funds held by Lender shall not be sufficient to pay
<br />taxes, assessments, insurance premiums and ground rents as they fall due, Borrower shall pay to Lender
<br />any amount necessary to make up the deficiency in one or more payments as Lender may require.
<br />Upon payment in full of all sums secured by this Security Instrument, Lender shall promptly refund to
<br />Borrower any Funds held by Lender. If under paragraph 22 hereof the Property is sold or the Property is
<br />otherwise acquired by Lender, Lender shall apply, no later than immediately prior to the sale of the
<br />Property or its acquisition by Lender, any Funds held by Lender at the time of application as a credit
<br />against the sums secured by this Security Instrument.
<br />3. Application of Payments. Unless applicable law provides otherwise, all payments received by
<br />Lender under the Credit Agreement and paragraphs 1 and 2 hereof shall be applied by Lender first in
<br />payment of amounts payable to Lender by Borrower under paragraph 2 hereof, second, (in the order
<br />Lender chooses) to any finance charges, other charges and collection costs owing, and third, to the
<br />principal balance under the Credit Agreement.
<br />4. Prior Mortgages and Deeds of Trust; Charges; Liens. Borrower shall perform all of Borrower's
<br />obligations under any mortgage, deed of trust or other security agreement with a lien which has priority
<br />over this Security Instrument, including Borrower's covenants to make payments when due. Except to the
<br />extent that any such charges or impositions are to be paid to Lender under paragraph 2, Borrower shall
<br />pay or cause to be paid all taxes, assessments and other charges, fines and impositions attributable to
<br />the Property which may attain a priority over this Security Instrument, and leasehold payments or ground
<br />rents, if any. Within five days after any demand by Lender, Borrower shall exhibit to Lender receipts
<br />showing that all amounts due under this paragraph have been paid when due.
<br />5. Hazard Insurance. Borrower shall keep the improvements now existing or hereafter erected on
<br />the Property insured against loss by fire, hazards included within the term "extended coverage," floods
<br />and such other hazards as Lender may require and in such amounts and for such periods as Lender may
<br />require. Unless Lender in writing requires otherwise, the policy shall provide insurance on a replacement
<br />cost basis in an amount not less than that necessary to comply with any coinsurance percentage
<br />stipulated in the hazard insurance policy, and the amount of coverage shall be no less than the Maximum
<br />Principal Balance plus the full amount of any lien which has priority over this Security Instrument.
<br />The insurance carrier providing the insurance shall be chosen by Borrower subject to approval by
<br />Lender; provided, that such approval shall not be unreasonably withheld. All insurance policies and
<br />renewals thereof shall be in a form acceptable to Lender and shall include a standard mortgage clause in
<br />favor of and in a form acceptable to Lender. Lender shall have the right to hold the policies and renewals
<br />thereof, subject to the terms of any mortgage, deed of trust or other security agreement with a lien which
<br />has priority over this Security Instrument.
<br />In the event of loss, Borrower shall give prompt notice to the insurance carrier and Lender. Lender
<br />may make proof of loss if not made promptly by Borrower. All insurance proceeds are hereby assigned to
<br />Lender and shall be paid to Lender to the extent of all sums secured by this Security Instrument, subject
<br />to the terms of any mortgage, deed of trust or security agreement with a lien which has priority over this
<br />Page 3 of 7 ENE999-E (NE)
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