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Form 3028 9/90 . ..u 93-- 11.089:t TOGETHER WITH all the improvements now or hereafter erected on the property, and all easements, appurtenahtes, and fixtures now or hereafter a part of the property_All replacem\~nts and additions shall also be covered by this Security Instrument. All of the foregoing is referred to in this Security Instrument as the "Property'- BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby conveyed and has the right to grant and convey the Property and that the Property is unencumbered, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all claims and demands. subject to any encumbrances of record. THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform covenants with limited valiations by jurisdiction to constitute a uniform security instrument covering real property. UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal ~nd Interest; Prepayment and Late Charges. Borrower shall promptly pay when due the principal of and interest on the debt evidenced by the Note and any prepayment and late charges due under the Note. 2. Funds for Taxes and Insurance. Subject to applicable law or to a written waiver by Lender. Borrower shall pay to Lender on the day monthly payments are due under the Note. until the Note is paid in full. a sum ("Funds") for: (a) yearly taxes . and assessments which may attain priority over this 'Security Instrument as a lien on the Property: (b) yearly leasehold payments or ground rents on the Property. if any: (c) yearly hazard or property insurance premiums: (d) yearly flood insurance premiums, if any: (e) yearly mortgage insurance premiums, if any; and (f) any sums payable by Borrower to Lender. in accordance with the provisions of paragraph 8. in lieu of the payment of mortgage insurance premiums. These items are called ~Escrow Items." Lender may. at any time. collect and hold Funds in an amount not to exceed the max:mum amount a lender for a federally related mortgage loan !TIay require for Borrower's escrow account under the federal Real Estate Settlement Procedure.. Act of 1974 as amended from time to time. 12 V.S.C. Section 2601 et seq. ("RESPA"), unless another law that applies to the Funds sets a lesser amount. If so, Lender may. at any time. collect and hold Funds in an amount not to exceed the lesser amount. Lender may estimate the amount of Funds due on the basis of current data and reasonable estimates of expenditures of future Escrow Items or otherwise in accordance with applicable law. The Funds shall be held in 3n institution whose deposits are insured by a federal agency. instrumentality, or entity (including Lender. if Lender is such an institution) or in any Federal Home Loan Bank. Lender shall apply the Funds to ray the Escrow Items. Lender may not charge Borrower for holding and applying the Funds. annually analyzing the escrow account. or verifying the Escrow Items. unless Lender pays Borrower interest on the Funds and applicatlle law permits Lender to make such a charge. However. Lender may require Borrower to pay a one-time charge for an independent real estate tax reporting service used by Lender in connection with this loan. unless applicable law provides otherwise. Unless an agreement is made or applicable law requires interest to be paid. Lcnder shall not be required to pay Borrower any interest or earnings on tht Fundfi. Borrower and Lender may agree in writing, hmvever, that interest shall be paid on the Funds. I:.ender shall give to Borrower. without charge. an annual accounting of the Funds. showing credits and debits to the Funds and the rurpose for which each debit to the Funds was made. The Funds are pledged as additional security for all sums secured by this Security Instrument. If the Funds held by Lender exceed the amounts permitted to be held by applicable law. Lender shall account to Borrower for the excess Funds in accordance with the requirements oj applicable law. If the amount of the Funds held by Lender at any time is not sufficient to pay the Escrow Items when due. Lender may so notify Borrower in writing. and. in such case Borrower shall pay to Lender the amount necessary to make up the deficiency. Borrower shall make up the deficiency ill no more than twelve monthly payments. at Lender's sole discretion. Upon payment in full of all sums secured by this Security Instrument. Lender shall promptly refUnd to Borrower any Funds held by Lender. If. under paragraph 21, Lender shall acquire or sell the Property. Lender. prior to the acquisition or sale of the Property, shail apply any Funds held by Lender at the time of acquisition or sale as a credit against the sums secured by this Security Instrument. 3. Application of Payments, Unless applicable law provides otherwise. all payments received by Lender under paragraphs I and 2 shall he applied: firs!. to any prepayment charges due under the Note; second_ to amounts rayable under paragraph 2; third, to interest due: fourth. to principal due; and last. to any late charges due under the Note. 4. Char-gcs; Liens, Borrower shall pay all taxes, assessments. charges. fines and impositions attributahle to the Property which may attain priority over this Security Instrument. and leasehold payments or ground rents. if any. Borrower shall pay these obligations in the manner provided in paragraph 2. or if not raid in that manner. Borrower shall pay them on time directly to the person owed payment. Borrower shall promptly furnish to Lender all notices of amounts to be paid under this paragraph. If Borrower makes these payments directly. Borrower shall promptly furnish to Lender receipts evidencing the payments. Borrower shall promptly discharge any lien which has priority over this Security Instrument unless Borrower: (a) agrees in writing tn the payment of the obligation secured by the lien in a manner acceptable to Lender: (b) contests in good faith the lien by. or defends against enforcement of the lien in. legal proceedings which in the Lender's opinion operate 10 rrevent the enforcement of the lien; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Sccurity Instrument. If Lender determines thm any part of the Property is subject to a lien which may attain priorily over this Security Instrumcnt, Lender may give P,jrrower a notice identifying the lien. Borrower shall satisfy the lien or take one or more of the actilJIlS sct forth above within 10 days of the giving of notice. Peut:t '2 or 6