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200213670 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 the Real Estate Settlement Procedures Act of 1974, 12 U.S.C. § 2601 e5 sea and implementing regulations, 24 CPR Pact 3500, as they may he amended from trine to nine ( "RESPA "), except that the cushion or reserve permitted by RESPA for unanticipated disbursements of dsburscancuts before the Borrowers payments are available In the account troy not he based on amounts due for the mortgage insurance premium. If the amounts held by Lender I'or Escrow Item exceed the amounts permitted to be held by RESPA. Lender shall deal with the excess funds as required by RESPA. 11 the amount 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 of deficiency as permitted by RESPA The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument If Borrower tenders to Lender the full payment of all such snits. Borrower's account shall be credited with the balance remaining for all installment itens (a), (b), and (U 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 to a foreclosure sale of the Property or its acqu is ltion by Lender. Borrowers account shall be credited with any balance remaining for all instal l meats for items (a), (b), and (c). a Application of Pub. All payments under paragraphs I and 2 shall be applied by Lender as follows: First to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premium: Second, to any Dues, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as required: Third, to interest due under the Note: Faartit to canonization of ate principal of the Note; Fifth, to late charges due under the Note. 4 Fire, Flood and Othe Hazard Insurarre Borrower shall insure all improvements on the Property, whether now in existence or subsequently erected, against any hoards, casualties, and contingencies, including fire, for which Lender requires insurance. This insurance shall be maintained in the amounts and for the patinas 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 be carried with companies approved by Lender The insurance politics and any renewals shall be held by Lender and shall include loss payable clauses in favor of, 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 it not made promptly by Borrower Each insurance company concemed is hereby authorized and directed to make payment for such loss directly to Lender. instead olio Borrower and to Lendcrjointly- All or any part of the insurance proceeds may be applied by Lender, at its option, elther(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 3_ and then to prepayment of principal, or (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 o1 'the monthly payments which are referred to in Paragraph 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 m the entity legally entitled thereto. In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the indelr edne: s, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser S Ocatim y, Presevatiao,Ma:• +tintirsoand Profer4ondthe Propat Borrower' s Loan Application' Leaseltolds Borrower shall occupy, establish, and use the Property as Borrowers principal residence within sixty days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower's principal residence total least one year after the date of occupancy, miless the Secretary determines this requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are heyond Fenno, r control. Borrower shall notify Lenders salary extenuating circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, ressonahle wear and unit excepted- Lendermay inspect the Property if the Property is vacant or abandoned or the loan is in default. Lender may lake reasenchla action to protect and preserve such vacant or abandoned Property. Borrower shall also be in default if Borrower, during the loan application process. gave materially false or inaccurate information at statements to Lender (or failed m provide Leader with any malarial information) in connection with the loan evidenced by the Note, including. but not limited m, representations concerning Borrowers occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold Borrower shall utmply wish the provisions of the lease If Borrower acquires fee title to the Property, the leasehold and fee title shall not he merged unless Lender agrees to the merger in writing_ a Cmdatmfione The proceeds of any award or claim for damages, direct or consequential, in connection with any ccndemmation or other taking of any part of the Property_ or for comcyarme in place of condemnation, are hereby assigned and shall he paid to Lcndcr to the extent of the full amount of the indebtedness that remains unpaid under ate Note and this Security Instrument. Lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security Instrument, font to any delinquent amounts applied in the eider provided in Pamgaph 3, and then to prepayment of principal. Any application of the proceeds to the principal shall not extend or postpone dhe due date of the monthly payments, which arc referred to in 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 Instrument shall be paid to the entity legally entitled theino- 7. Charges m Barrows and Protection of Looda's Rights in the Property. Borrower shall pay all governmental or nnnidpal charges, lines and impositions that are not included in Paragraph 2. Borrower shall pay these obligations on time directly to tine entity which is owed the payment. 11 failure to pay would adversely affect Lcndci s interest in the Property_ upon Lenders request Borrower shall promptly lumish to Lenderreceipts esidcnclng these payments. If Borrower fails to make these payments or the payments required by Paagraph 2. or fails to perform any other 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, forcondemnation or to enforce laws or regulations), then Lender may do and pay whatever is necessary to protect the value of the Property and Lender's rights In Lire Property, including payment of tuxes, hazard insaanceand other items mentioned in Paragraph 2. uFe 2 u15 1101 CV (8 /01) 11,2311,