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4357692426 200610518 BORROWER COVENANTS that Borrowcr is lawfully seised of the estate hereby conveyed and has the right to grant and convey the Property and that the Propcrty is unencumbcrcd, except for encumbrances of record. Borrower warrants and will defend generally the title to the Property against all elaims and demands, subject to any encumbrances of record. THIS SECURITY INSTRUMENT combines unifonll covenants for national use and non-unifonll covenants with limited variations by jurisdiction to constitute a unifonn security instrument covering real property. UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges. Borrower shall pay when due the principal of, and interest on, the debt evidenced by the Note and any prepayment charges and late charges due under the Note. Borrower shall also pay funds for Escrow Items pursuant to Section 3. Payments due under the Note and this Security Instrument shall be made in U.S. currency. However, if any check or other instrument received by Lender as payment under thc Note or this Security Instrument is returned to Lender unpaid, Lender may require that any or all subsequent payments due under the Note and this Security Instrument be made in one or more of the following fonns, as selected by Lcnder: (a) cash; (b) money order; (c) certiHed check, bank check, treasurer's check or cashier's check, provided any such cheek is drawn upon an institution whose deposits arc insured by a federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer. Payments are deemcd received by Lender when received at the location designatcd in the Note or at such othcr location as may be designated by Lender in accordance with the notice provisions in Section 15. Lender may return any payment or partial payment if the payment or partial payments are insuft1cient to bring thc Loan current. Lender may accept any payment or partial payment insuft1cient to bring the Loan current, without waiver of any rights hereunder or prejudice to its rights to refuse such payment or partial payments in the future, but Lender is not obligated to apply such payments at the time such payments are accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay interest on unapplied funds. Lender may hold such unapplied funds until BOlTower makes payments to bring the Loan currcnt. If Borrower docs not do so within a reasonable period of time, Lender shall either apply such funds or return them to BOlTower. If not applied earlier, such funds will be applied to the outstanding principal balancc under the Note immediately prior to foreclosure. No offset or claim which Borrower might have now or in the future against Lender shall relieve Borrower from making payments due under the Note and this Security Instrument or pcrfornling the covenants and agreements securcd by this Security Instrument. 2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all payments accepted and applicd by Lender shall be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; (c) amounts due under Section 3. Such paymcnts shall be applied to each Periodic Payment in the ordcr in which it became due. Any remaining amounts shall be applied Hrst to latc charges, second to any other amounts due under this Security Instrument, and then to reduce the principal balance of the Notc. If Lendcr receives a payment from Borrowcr for a delinquent Periodic Payment which includes a suft1cient amount to pay any late charge due, the payment may be applied to the delinquent payment and the late charge. If more than one Periodic Payment is outstanding, Lender may apply any payment receivcd from BOlTower to the repayment of the Periodic Payments if, and to the extent that, each payment can be paid in full. To the extent that any excess exists after the payment is applied to ilie full payment of one or more Periodic Payments, such excess may be applied to any late charges due. Voluntary prepayments shall be applicd fIrst to any prepayment charges and then as described in tlle Note. Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under tlle Note shall not extend or postpone the due date, or changc the amount, of the Periodic Payments. 3. Funds for Escrow Items. Borrower shall pay to Lender on tlle day Periodic Payments are due under the Note, until the Note is paid in full, a sum (tlle "Funds") to provide for payment of amounts due for: (a) taxes and assessments and otller items which can attain priority over iliis Security Instrument as a lien or encumbrance on the Property; (b) lcasehold payments or ground rcnts on the Property, if any; (c) premiums for any and all insurance required by Lender undcr Section 5; and (d) Mortgage Insurance .-6A(NE) (0407) <!l Page 4 of 15 '",., {fA 0J1{; ~ Form 3028 1101