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200202670
<br />LOAN NO. 9054
<br />Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to
<br />exceed the maximum amount that may be required for Borrower's escrow account under the Real Estate
<br />Settlement Procedures Act of 1974, 12 U.S.C. Section 2601 at seq. and implementing regulations, 24 CFR
<br />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
<br />are available in the account may not be 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,
<br />Lender shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held
<br />by Lender at any time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrower
<br />and require Borrower to 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.
<br />If Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with
<br />the balance remaining for all installment items (a), (b), and (c) and any mortgage insurance premium
<br />installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly
<br />refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property or its
<br />acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments
<br />for items (a), (b), and (c).
<br />3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as
<br />follows:
<br />Fib to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly
<br />charge by the Secretary instead of the monthly mortgage insurance premium;
<br />Second to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and
<br />other hazard insurance premiums, as required;
<br />Th_ ird. to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note; and
<br />Fi_ fth, to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property,
<br />whether now in existence or subsequently erected, against any hazards, casualties, and contingencies,
<br />including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and
<br />for the periods that Lender requires. Borrower shall also insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All
<br />insurance shall be carried with companies approved by Lender. The insurance policies and any renewals
<br />shall be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to,
<br />Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of
<br />loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and
<br />directed to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly. All
<br />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
<br />the order in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the
<br />damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due
<br />date of the monthly payments which are referred to in paragraph 2, or change the amount of such
<br />payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness
<br />under the Note and this Security Instrument shall be paid 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
<br />extinguishes the indebtedness, all right, title and interest of Borrower in and to insurance policies in force
<br />shall pass to the purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
<br />Application; Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal
<br />residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale
<br />or transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for
<br />FHA case No. 321-2181965-703
<br />ELF- 4R(NE) (9604) Page 3 of 8 i��uaia.
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