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2002134 &1 Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may be required for Borrower s escrow account under tile Real Estate Settlement Procedures Act of 1974, 12 1 1S.C. § 2601 ! SSq, and implementing regulations. 24 CFR Part 3500, as they may be amended from time to time (' RESPA "), except that the cushion or reserve permitted by RES13A for unanticipated disbursements or disbursements before the Borrower's payments are available in the account may not he basal on amounts due for the mortgage insurance premium. If the amounts held by Leader for Escrow Items exceed the amounts provided to he 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 Borrower to make up the shortage or deficiency as permitted by RESPA. The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument If Burrower tenders to Lender the PoII payment of all such sums, Bunoweds account shall be credited with the balance remaining for all installment items (a), (h), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and lender shall promptly refund any execs Ponds to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall he credited with any balance remaining l mall 'wstallments too items (a), (b), and (c). 3. Application of Payments. All payments under pang uphs I and 2 shall be applied by Lender as follows: First to the mortgage insurance pmnlum to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance me ... lum, Second, m any taxes, special assessments, leasehold payments or ground rents, and tire, Hood and other hazard insurance premiums. as required, Third, to interest due under the Note. Fourth, to amortization of tire principal of the Note Fifth, to late charges due under the Note. 4. Fire, Flood and Other hazard Insurance. Borrower shall insure all improvements on the Property, whether now in existence or subsequently ertmtetl, against any hazards, casualties, and contingencies, including fire, for which Lender requires insurance. ]'his insurance shall he maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent required by the Secretary. All insurance shall he carried with companies approved by Lender The insornnce policies and any renewals shall be held by Lender and shall include loss payable clauses in favor cif, and in a form acceptable to. Lender. In the event of loss, Borrower shall give Lender Immediate notice by mail. Lender may make proof of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to make payment for such loss directly to lender, insteadof to Burrower and to Lendermintly. All or arty part of the insurance proceeds may be 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 amounts applied in the order in Paragraph 7, and then to prepayment of principal, or (b) to the restoration of 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 Pamgmph 2, or 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 thcrcto. In the event of moulosum of this Security Instrument or other transfer of title to the Property that extinguishes the indebtedness, all right, title and interest of Borrower in 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 Bonowefs principal madence within sixty days after the execution of this Security Instrument and shall continue to occupy the Property us Butmweh principal residence for at least one year after the date of occupancy, unless the Secretary determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control, Borrower shall notify Lenders of any exlewating circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, reasonable weu 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 m default If Borrower, during the loan application process, gave materially false or inaccurate information or statements to Lender (or failed to provide Lender with any material information) in connection with the loan evidenced by the Note, including, but not limited to. representations concerning Borrower's occupancy of the Property as a principal residence. If this Security Instalment is on a leasehold. Borrower shall comply with the provisions of the lease. If Bonower acquires fee title to the Property, the leasehold and fee title shall not he merged unless Lender agrees to the merger in writing. 6. Condemn tine. The prm,-ecds ul arty award m claim ba damages, direst or consequential, in connection with any condemnation or other taking of any part of the Property, or for eunvcym¢c in place of condenmatmo, are hereby assigned and shall be paid to Lender to the extent of the full amount of the indebtedness that oalu nrs mtpaiJ under the Note and this Security Instrument Lender shall apply such proceeds m the reduction of the indebtedness under the Note and this Security hatimuent, 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 referred to is Paragraph 2, or change the amount of such payments. Any excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Insmment shall be paid to the entity legally entitled thereto. 7. Charges In Borrower and Protection of Lender's Rights in the Properly. Borrower shall pay all governmental a municipal charges, fines and impositions that am not included in Paragraph 2. Bonower shall pay these obligations on time directly to the entity which is owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lendefs request Borrower shall promptly furnish to Lender receipts evidencing these payments. If Borrower fails m m", tress payments or the payments required by Paragraph 2. or fails to perform any other covenants and agreements contained in this Security hrsWmenl or there is a legal proceeding that may significantly affect Lendefs rights In the Property (such as a proceeding in bankmptey, for condemnation er to mfo¢e laws m ilgalmmus), then Leader may do and pay whatever is necessary to protect the value of fie Property and Lendefs rights in the Property. inc]uding payment of taxes, hazard insuranceand other items mentioned in Paragraph 2. Po6c 2of5 1101 CV l8N1r 161 ]!Lf GOTO(W39a2)