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200208011
<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 by
<br />Lender at any time are not sufricient to pay the Escrow Items when due, Lender may notify the Borrower and
<br />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. If
<br />Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the
<br />balance remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment
<br />that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess
<br />funds to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender,
<br />Borrower's account shall be credited with any balance remaining for all installments for items (a), (b), and
<br />(c).
<br />3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as
<br />follows:
<br />First, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge
<br />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 other
<br />hazard insurance premiums, as required;
<br />'Third, to interest due under the Vote;
<br />ourth, to amortization of the principal of the Note; and
<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,
<br />whether now in existence or subsequently erected, against any hazards, casualties, and contingencies, including
<br />fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the
<br />periods that Lender requires. Borrower shall also insure all improvements on the Property, whether now in
<br />existence or subsequently erected, against loss by floods to the extent required by the Secretary. All insurance
<br />shall be carried with companies approved by Lender. The insurance policies and any renewals shall be held by
<br />Lender and shall include loss payable clauses in 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
<br />loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed
<br />to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly. All or any
<br />part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the
<br />indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order
<br />in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged
<br />Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the
<br />monthly payments which are referred to in paragraph 2, or change the amount of such payments. Any excess
<br />insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this
<br />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 shall
<br />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 or
<br />transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for at least
<br />one year after the date of occupancy, unless Lender determines that requirement will cause undue hardship for
<br />Borrower, or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall
<br />notify Lender of any extenuating circumstances. Borrower shall not commit waste or destroy, damage or
<br />substantially change the Property or allow the Property to deteriorate, reasonable wear and tear excepted.
<br />Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default. Lender may
<br />take reasonable action to protect and preserve such vacant or abandoned Property. Borrower shall also be in
<br />default if Borrower, during the loan application process, gave materially false or inacc rah to formation or
<br />mifia
<br />(',�- 4NINE) �eeon s.e• � er e
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