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200210190 Lender only, at any time, collect and hold amounts for Escrow Items in w aggregate amuum not to exceed the maxinmmn amount that may be required for Borrower's escrow account under the Real Estate Settlement Procedures Act of 1974, 12 US.C. § 2601 Sl eat and implementing regulations, 24 CFR Part 3500, is they may be amended from time to time ( "RESPA "), except that the cushion or reserve permitted by RESPA for unanticipated disbursements or disbursements before the Borrower's payments are available in the account may not be based on amounts due for the mortgage insurance premium. If the amounts held by Lender for Escrow Items exceed the amounts remained to be held by RESPA, Lender shall deal with the excess 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 may notify the Borrower and require Bonower to make up the shortage or deficiency as permitted by RESPA. The Escrow Funds are pledged as additional secunty for all sums secured by this Security Instrument If Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance remaining for all installment items (a), (b), mid (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Borrower. Immediately prior in a foreclusure sale of the Property or its acquisition by Lender, Borrower's =count shall be credited with any balance remaining for all installments for items (a), (b), and (c). 3. Application of Payments. All payments under per gfaphs I and 2 shall be applied by Lender as follows: First to the mortgage insurance prenuum to be paid by Lender in the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premlunn Second, to rely taxes, special resess him s, leasehold payments or ground rents, and fire, flood land other hazard insurance premiums, as required; Third, in interest due under the Now; Fourth, to amortization of the principal of the Note; Fifth, to late charges due under he Now. 4. fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property, whether now in existence or subsequently erected, against any hazards, casualties, aid contingencies, including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts aid for the Periods that Lender requires. Borrower shall also insure all improvemens on the Property, whether now in existence or subsequently erected, against lass by floods to the extent required by the Secretary. All insurance shall be carried with companies approved by Lender. The Insurance policies and any renewals shall be held by Lender and shall include lass payable clauses in favor of, and in a Conn acceptable m, Lender. In the event of loss. Borrower shall give Lender inunect a 1, notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby autllurized and directed to make payment for such loss directly to Lender, instead of to Borrower and to I.eaier jointly. All or any pmt of the insurance proceeds may he applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to any delinquent somme is applied in the order in Paragraph 3, and then to prepayment of principal, ur (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the monthly payments which are referred to in Paragraph 2, of change the amount of such payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto. In the event of foreclosure of this Seauiry Instmment or other ransfer of title to the Property that extinguishes the indebtedness, all right, title and interest of Borrower or and to insurance policies in force shall pass to the purchaser. 5. occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. Borrower shall occupy, establish, and use the Property as Bonower's principal residence within sixty days a8er the execution of this Security Instrument and shall continue to occupy the Property as Bonower s principal iwidence for at least one year after the date of occupancy, unless the Secretary dencrimmes this requirement will cause undue lordship for Borrower, or unless extenuating circumstances exist which are beyond Borrowers control. Borrower shall notify Lenders of any extenuating circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, reasonable wea' and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower shall also be in default if Borrower, during the low application process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with coy material information) In connection with the low evidenced by the Note, including, but not limited ta, representations concerning Borrower's occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold, Burrower shall comply with the Provisions of the lease If Bonower acquires fee title to the Property, the leasehold and fee title shall not be merged unless Lender agrees to the merger in writing. 6. Condemnation. The proceeds of any award or claim for damages, dire,R or consequential, in connection with any condemnation or other taking of any pat of the Property, or for conveyance in place of condemnation, are hereby assigned and shall be paid to Lender to the extent of the full s 000nt of the indebtedness that remains unpaidunder the Note and this Security Instrument Lender shall apply such proceeds to the reduction of line indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order provided 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 of the monthly payments, which are refcra d to in Paragraph 2, of change the =until of such payments. Any excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to ale entity legally entitled thereto. 7. Charges to Borrower and Protection of Lender's Rights in the Properly. Borrower shall pay all governmental or municipal charges, fines and num, dons that are net included in Paragraph 2. Borrower shall pay these obligations ore time directly to the entity which is owed the payment. If failure to pay would adversely affect Lenders interest in the Property, upon Lenders request Boaowcr shall promptly famish to Lender receipts evidencing these payments. If Borrower tails to make these payments or the payments required by Paragraph 2, or fails In perform any other covenants and agreements contained in this Security Instrument, or there is a Icgal proceeding that may significantly affect Lender's rights in the Property (such as a proceeding in bankruptcy, for coudemnationor to enforce laws or regulations), then Lender may do and pay whatevens necessary to protect the value of the Property and Lender's rights in the Property, including payment of taxes, hazard insurance and other items mentioned in Paragraph 2. Page 3 of 5 1101 Cv(Biel) G11848 Gor000002law)