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200111413 <br />If the amountsheld by Lenderfor Escrow Items exceedthe amountspermittedto be held by RESPA,Lender <br />shall accountto Borrowerfor theexcessfunds as requiredby RESPA. If the amountsof funds heldby Lenderat any <br />time are not sufficientto pay the Escrow Itemswhen due, Lendermay notify the Borrowerand require Borrowerto <br />make up the shortage as permitted by RESPA. <br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If <br />Borrowertendersto Lenderthe full paymentof all such sums, Borrower'saccountshall be creditedwith the balance <br />remainingfor all installmentitems (a), (b), and (c) and any mortgageinsurancepremiuminstallmentthat Lenderay <br />not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Borrower. <br />Immediatelyprior to a foreclosure sale 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. Application of Payments. All paymentsunderparagraphst and shall be appliedby Lenderas follows: <br />Fir , to the mortgageinsurancepremiumto be paid by Lenderto the Secretaryor to the monthlychargeby the <br />Secretaryinsteadof the monthlymortgageinsurancepremium; <br />Second to any taxes, special assessments,leaseholdpaymentsor ground rents, and fire, flood and otherhazard <br />insurance premiums, as required; <br />Third to interestdue underthe Note; <br />Fourth toamortizationDf the principalof the Note; and <br />Fifth, to late chargesdue underthe Note. <br />4. Fire, Flood and Other Hazard Insurance. Borrowershall insure all improvements3n the Property,whether <br />now in existenceor subsequentlyerected,againstany hazards, casualties ,andcontingenciesjncludingfire, for which <br />Lender requires insurance. This insurance shall be maintainedin the amounts and for the periods that Lender <br />requires. Borrower shall also insure all improvementson the Property, whether now in existence or subsequently <br />erected,against loss by floods to the extentrequiredby the Secretary.All insuranceshall be carriedwith companies <br />approvedby Lender.The insurancepolicies and any renewalsshall be held by Lenderand shall include loss payable <br />clauses in favor of, and in a form acceptable to, Lender. <br />In the eventof loss, Borrowershall give Lenderimmediatenoticeby mail. Lendermay makeproof of loss if not <br />madepromptlyby Borrower. Eachinsurancecompanyconcernedis hereby authorizedand directedto makepayment <br />for such loss directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance <br />proceedsmay be appliedby Lender,at its option, either (a) to the reductionof the indebtednessinderthe Note and <br />this Security Instrument first to any delinquentamountsappliedin the orderin paragraph3, and then to prepayment <br />of principal, or (b) to the restorationor repair of the damaged Property. Any applicationof the proceedsto the <br />principalshall not extendor postponethe due date of the monthlypaymentswhich are referredto in paragraph2, or <br />changethe amountof such payments.Any excess insuranceproceedsover an amountrequiredto pay all outstanding <br />indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto. <br />In the event of foreclosureof this Securitylnstrumentor othertransferof title to the Propertythat extinguishes <br />the indebtedness,all right, title and interest of Borrower in and to insurance policies in force shall pass to the <br />purchaser. <br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; <br />Leaseholds. Borrowershall occupy, establish, and use the Property as Borrower 'sprincipalresidencewithin sixty <br />days after the executionof this Security Instrument(or within sixty days of a later sale or transferof the Property) <br />and shall continue to occupy the Property as Borrower's principal residencefor at least one year after the date of <br />occupancy,unless Lenderdeterminesthat requiremenbvill cause undue hardshipfor Borrower,or unless extenuating <br />circumstances exist which are beyond Borrower's control. Borrower shall notify Lender of any extenuating <br />circumstances.Borrowershall not commitwaste or destroy, damageor substantiallychangethe Propertyor allow the <br />Propertyto deteriorate feasonablewear and tear excepted.Lendermay inspectthe Propertyif the Propertyis vacant <br />or abandonedor the loan is in default. Lender may take reasonableaction to protect and preserve such vacant or <br />Initia� /�Tf✓I/I/� A.i1 � <br />(M- 4N(NE) (9802).01 Page 3 of 8 �[`�� <br />