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200610931 BORROWER COVENANTS that Borrowcr is lawfully seiscd of the estate hert:by conveyed and has the right to grant and convey the Property and that the Propt:rty is unencumbered, except for encumbrances of record. Borruwer warrants and will defcnd generally the title to the Property against all claims and demands, subject to any t:ncumbrances of rt:cord. THIS SECURITY INSTRUMENT combines uniform cuvenants for national use and non-uniform covenants with limited variations by jurisdiction to constitute a unifufJll security instrument covering real property. UNIFORM COVENANTS. Borrower and Lender covcnant and agrec as follows: 1. Payment of Principal, Interest, Escrow Items, Prepayment Charges, and Late Charges. Borrower shall pay when due the principal uf, and interest un, tht: debt evidt:nced by the Nutt: and any prepayment chargt:s and late ehargt:s due under the Nott:. Borrower shall also pay funds for Escrow ltt:ms pursuant to Sectiun 3. Payments due under the Note and this Security Instrument shall be made in U.S. eurrt:ncy. However, if any check or other instrument receivt:d by Lender as payment under tht: Note or this Security Instrument is returned to Lender unpaid, Lender may require that any or all subsequent payments due under tht: Note and this Security Instrumt:nt be madc in ont: or more of the following forms, as selccted by Lendcr: (a) cash; (b) money order; (c) certified check, bank check, treasurer's check or cashier's check, provided any such check is drawn upon an instiultion whose dt:posits are insurt:d by a fedt:ral agency, instrumentality, or entity; or (d) Electronic Funds Transfer. Payments are deemed received by Lender when received at the location designated in the Note or at such other location as may be designated by Lender in accordance with thc notice provisions in Section IS. Lender may rdum any payment or partial payment if the payment or partial payments are insufficient to bring the Loan current. Lender may accept any payment or pa11ial payment insufficicnt to bring the Loan current, without waivcr of any rights hereunder or prejudicc 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 arc accepted. If each Periudic Paymcnt is applied as of its scheduled due date, then Lender nced not pay interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring the Loan current. If Borrower does not do su within a reasonable period of time, Lender shall either apply such funds or return them to Borrower. If not applied earlier, such funds will be applied to the outstanding principal balance 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 performing the covenants and agreements secured by this Security Instrument. 2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all paymcnts accepted and applied by Lcnder shall be applied in the following order of priority: (a) interest duc under the Note; (b) principal due under the Note; (c) amounts due under Section 3. Such payments shall bc applicd to each Periodic Paymcnt in the ordcr in which it became duc. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this Security Instrument, and then to reduce the principal balance of the Note. If Lender receives a payment from Borrower for a delinquent Periodic Payment which includes a sufficicnt amount to pay any late charge due, the payment may be applied to thc delinquent payment and the late charge. If more than one Pcriodic Payment is outstanding, Lender may apply any payment received from Borrower 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 paymcnt is applied to the full payment of one or more Periodic Payments, such excess may be applied to any late charges due. Voluntary prepayments shall be applied first to any prcpayment charges and then as described in the Note. Any application of payments, insurance proceeds, or :Miscellaneous Proceeds to principal due under the Note shall not cxknd or postpone the due date, or change the amount, of the Periodic Payments. 3. Funds for Escrow Items. Borrower shall pay to Lender on the day Periodic Payments arc due under the Note, until the Notc is paid in full, a sum (the "Funds") to provide for payment of amounts due for: (a) taxes and assessments and other items which can attain priority ovcr this Security Instrument as a lien or cncumbrance on tht: Property; (b) leasehold payments or ground rents on the Property, if any; (c) premiums for any and all insurance required by Lender under Section 5; and (d) Mortgage Insurance ~-6A(NE) (0407) Page 4 of 15 c 9 I{tl ,nitia,s,--,..Ap(' Form 3028 1101 00858075