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200408310 4. Hazard Insurance. Borrowers shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage" and any other hazards for which Lenders require insurance. This insurance shall be maintained in the amounts and for the periods that Lenders require. The insurance carrier providing the insurance shall be chosen by Borrowers subject to Lenders' approval which shall not be unreasonably withheld. All insurance policies and renewals shall be acceptable to Lenders and shall include a standard mortgage clause. Lenders shall have the right to hold the policies and renewals. If Lenders require, Borrowers shall promptly give to Lenders all receipts of paid premiums and renewal notices. In the event of loss, Borrowers shall give prompt notice to the insurance carrier and Lenders. Lenders may make proof of loss if not made promptly by Borrowers. Unless Lenders and Borrowers otherwise agree in writing, insurance proceeds shall be applied to restoration or repair of the Property damaged, if the restoration or repair is economically feasible and Lenders' security is not lessened. If the restoration or repair is not economically feasible or Lenders' security would be lessened, the insurance proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrowers. IfBorrowers abandon the Property, or do not answer within 30 days a notice from Lenders that the insurance carrier has offered to settle a claim, then Lenders may collect the insurance proceeds. Lenders may use the proceeds to repair or restore the Property or to pay sums secured by this Security Instrument, whether or not then due. The 30 day period will begin when the notice is given. Unless Lenders and Borrowers otherwise agree in writing, any application of proceeds to principal shall not extend or postpone the due date of the yearly payments referred to in paragraphs I and 2 or change the amount of the payments. If under paragraph 19 the Property is acquired by Lenders, Borrowers' right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Lenders to the extent of the sums secured by this Security Instrument immediately prior to the acquisition. 5. Preservation and Maintenance of Property; Leaseholds. Borrowers shall not destroy, damage or substantially change the Property, allow the Property to deteriorate or commit waste. If this Security Instrument is on a leasehold, Borrowers shall comply with the provisions of the lease, and if Borrowers acquire fee title to the Property, the leasehold and fee title shall not merge unless Lenders agree to the merger in writing. 6. Protection of Lenders' Rights in the Property; Mortgage Insurance. If Borrowers fail to perform the covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lenders' rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lenders may do and pay for whatever is necessary to protect the value of the Property and Lenders' rights in the Property. Lenders' actions may include paying any sums secured by a lien which has priority over this Security Instrument, appearing in court, paying attorneys' fees and entering on the Property to make repairs. Any amounts disbursed by Lenders under this paragraph 6 shall become additional debt of Borrowers secured by this Security Instrument. Unless Borrowers and Lenders agree to other terms of payment, these amounts shall bear interest from the date of disbursement at the Note rate and shall be payable, with interest, upon notice from Lenders to Borrowers requesting payment. If Lenders required mortgage insurance as a condition of making the loan secured by this Security Instrument, Borrowers shall pay the premiums required to maintain the insurance in effect until such times as the requirement for the insurance terminates in accordance with Borrowers' and Lenders' written agreement or applicable law. 7. Inspection. Lenders or their agents may make reasonable entries upon and inspections of the Property. Lenders shall give Borrowers notice at the time of or prior to an inspection specifying reasonable cause for the inspection. 8. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnation or other taking of any part of the Property, or for conveyance in lieu of condemnation, are hereby assigned and shall be paid to Lenders. In the event of a total taking of the Property, the proceeds shall be applied to the sums secured by this Security Instrument, whether or not then due, with any excess paid to Borrowers. In the event of a partial taking of the Property, unless Borrowers and Lenders otherwise agree in writing, the sums secured by this Security Instrument shall be reduced by the amount of the proceeds multiplied by the following fraction: (a) the total amount of the sums secured immediately before the taking, divided by (b) the fair market value of the Property immediately before the taking. Any balance shall be paid to Borrowers. If the Property is abandoned by Borrowers, or if, after notice by Lenders to Borrowers that the condemnor offers to make an award or settle a claim for damages, Borrowers fail to respond to Lenders within 30 days after the date the notice is given, Lenders are authorized to collect and apply the proceeds, at their option, either to restore or repair the Property or to pay the sums secured by 2