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<br />Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may
<br />be required for Borrower's escrow account under the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 gl =. and
<br />implementing regulations, 24 CFR Part 3500, as they may be amended from time to time ( "RESPA "), except that the cushion or reserve
<br />permitted by RESPA for unanticipated disbursements or disbursements before the Borrower's payments are available in the account may not be
<br />based on amounts due for the mortgage insurance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender shall deal with the excess
<br />funds as required by RESPA. If the amounts of funds held by Lender at any time are not sufficient to pay the Escrow Items when due, Lender
<br />may notify the Borrower and require Borrower to make up the shortage or deficiency as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If Borrower tenders to Lender the
<br />full payment of all such sums, Borrower's account shall be credited with the balance remaining for all installment items (a), (b), and (c) and any
<br />mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any
<br />excess funds to Borrower. Immediately prior 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 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 the Secretary instead of the
<br />monthly mortgage insurance premium;
<br />Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as
<br />required;
<br />Third, to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note;
<br />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 or
<br />subsequently erected, against any hazards, casualties, and contingencies, including fire, for which Lender requires insurance. This insurance
<br />shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the Property,
<br />whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All insurance shall be carried
<br />with companies approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in
<br />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 promptly by
<br />Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to Lender, instead of to
<br />Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of
<br />the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order in Paragraph 3, and then to
<br />prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not
<br />extend or postpone the due date of the monthly payments which are referred to in Paragraph 2, or change the amount of such payments. Any
<br />excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid
<br />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 indebtedness, all right,
<br />title and interest of Borrower in and to insurance policies in force shall pass to the purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. Borrower
<br />shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument
<br />and shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless the Secretary
<br />determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's
<br />control. Borrower shall notify Lenders of any extenuating circumstances. Borrower shall not commit waste or destroy, damage or substantially
<br />change the Property or allow the Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Property if the Property is
<br />vacant or abandoned or the loan is in default. Lender may take reasonable action to protect and preserve such vacant or abandoned Property.
<br />Borrower shall also be in default if Borrower, during the loan application process, gave materially false or inaccurate information or statements
<br />to Lender (or failed to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not
<br />limited to, representations concerning Borrower's occupancy of the Property as a principal residence. If this Security Instrument is on a
<br />leasehold, Borrower shall comply with the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall
<br />not be merged unless Lender agrees to the merger in writing.
<br />6. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or
<br />other taking of any part of the Property, or for conveyance in place of condemnation, are hereby assigned and shall be paid to Lender to the
<br />extent of the full amount of the indebtedness that remains unpaid under the Note and this Security Instrument. Lender shall apply such proceeds
<br />to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order provided
<br />in Paragraph 3, and then to prepayment of principal. 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 proceeds over an amount
<br />required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.
<br />7. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all governmental or municipal
<br />charges, fines and impositions that are not included in Paragraph 2. Borrower shall pay these obligations on time directly to the entity which is
<br />owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lender's request Borrower shall promptly
<br />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 other covenants and
<br />agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender's rights in the Property
<br />(such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to
<br />protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in
<br />Paragraph 2.
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