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I L 88- 100709 UNIFORM COVENANTS Borrower and lender covenant and agree as folhm s 1. Payment of Principal and Interest; Prepayment and Late Charges. Borrower shall prt)mptly pay when due the principal of and interesl on the debt evidenced by the Note and allY prepayment and late clwrges due under the "'ole, 2. Funds for Taxes and Insurance. Subject to applicable law or to a written \\ai\cr by lender. Borrower shall pay to Lender on the day monthly payments are due under the Note, unlillhe Note is paid In full. a sum ("Funds") equal to one-twelfth of: (a) yearly taxes and assessments which may attain priority over this Securily Instrument: (b) yearly leasehold payments or ground rents on the Property. if any; (c) yearly hazard insurance premiums: and (d) yearly mortgage insurance premiums, ifany. These items are called "escrow items." Lender may estimate the Funds due on the basis of current data and reasonable estimates of future escrow items. The Funds shall be held in an institution the deposits or accounts (\fwhich are insured or guaranteed by a federal or state agency (including Lender if Lender is such an institution). Lender shall apply the Funds to pay Ihe escrow items. Lender may not charge for holding and applying the Funds, analyzing the account or verifying the escrow items. unless Lender pays Borrower interest on the Funds and applicable law permits Lender to make such a charge. Borrower and Lender may agree in writing that interest shall be paid on the Funds. Unless an agreement is made or applicable law requires interest to be paid. Lender shall not be required to pay Borrower any interest or earnings on the Funds. Lender shall give to Borrower. without charge. an annual accounting of the Funds showing credits and debits to the Funds and the purpose for which each debit to the Funds was made. The Funds are pledged as additional security for the sums secured by this Security Instrument. If thc amount of the Funds held by Lender. together with the future monthly payments of Funds payable prior to the due dates of the escrow items, shall exceed the amount required to pay the escrow items when due. the excess shall be, at Borrower's option, either promptly repaid to Borrower or credited to Borrower on monthly payments of Funds. If the amount oithe Funds held by Lender is not sufficient to pay the escrow items when due. Borrower shall pay to Lender any amount necessary to make up the deficiency in one or more payments as required by Lender. Upon payment in full of all sums secured by this Security Instrument. Lender shall promptly refund to Borrower any Funds held by Lender. If under paragraph 19 the Property is sold or acquired by Lender. lender shall apply. no later than immediately prior to the sale of the Property or its acquisition by Lender. any Funds held by Lender at the time of application as a credit against the sums secured by this Security Instrument. 3. Application of Payments. Unless applicable law provides otherwise. all payments received by Lender under paragraphs I and 2 shall be applied: first, to late charges due under the Note; second. to prepayment charges due under the Note; third, to amounts payable under paragraph 2; fourth. to interest duc; and last. to principal due. 4. Charges; Liens. Borrower shall pay all taxes. assessments, charges, fines and impositions allributable to the Property which may attain priority over this Security Instrument. and lcasehold payments or ground rents. if any. Borrower shall pay these obligations in the manner provided in paragraph 2. or if not paid in that manner. Borrower shall pay them on time directly to the person owed payment. Borrower shall promptly furnish to Lender all notices of amounts to be paid under this paragraph. If Borrower makes thcsc payments directly. Borrower shall promptly furnish 10 Lender receipts evidencing the payments. Borrower shall promptly discharge any lien which has priority over this Security Instrumelll unless Borrower: (a) agrees in writing to thc payment of the ell ligation sccured by the lien in a manner acceptable to Lender; (b) contests in good faith the lien by, or defends against enforcemcnt of the lien in, legal proceedings which in the Lender's opinion operate to prevent thc enforcemcnt of the lien or forfciture of any part of the Property; or (c) secures from the holder of the lien an agreement satisfactory to Lendcr subordinating the lien to this Security Instrument. If Lender determines that any part of the Property is subjcct to a lien which may attain priority over this Security Instrument, Lender may give Borrowcr a notice identifying the lien. Borrower shall satisfy the lien or take one or more of the actions set forth above within 10 days of the giving of notice. 5. Hazard Insurance. Borrower shall keep the improvcments now existing or hereafter erected on the Property insured against loss by firc, hazards included within the tcrm "extended covcrage" and any other hazards for which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. The insurancc carrier providing thc insurance shall be chosen by Borrower subjcct to Lender's approval which shall not be unreasonably withheld. All insurance policies and renewals shall be acccptable to Lender and shall includc a standard mortgage clause. Lender shall have the right to hold lhe policies and renewals. If Lendcr requires, Borrowcr shall promptly givc to Lendcr all reccipts of paid premiums and renewal notices. In the evcnt of loss, Borrower shall give prompt notice to the insurance currier and Lender. Lender may make proof ofloss ifnot made promptly by Borrower. Unless Lender and Borrower otherwise agree in writing, insurance proceeds shall be applied 10 restoration or repair of the Property damaged, if the rcstoration or repair is economically feasible and Lender's security is not lessened. If the restoration or repair is not cconomically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to thc sums secured by this Security Instrument, whether or not then due. with any excess paid to Borrower. If Borrower abandons the Property, or does not answcr within 3D days a notice from lendcr that the insurance carrier has offered to settlc a claim, then Lender may collcct the insurance proceeds. Lender may use the proceeds to repair or rcstore the Propcrty or to pay sums securcd by this Security Instrument. whether or not then due. The 3D-day period will begin whcn thc notice is given. Unless Lender and Borrower otherwise agree in writing. any application of proceeds to principal shall not extend or postpone the due d:lIe of the monthly payments ref<:rred to in paragraphs I and 2 or change the amoulll of the payments. If under paragraph 19 the Property is acquired by Lender, Borrower's right to any insurance policies and proceeds resulting from damage to the Property prior to the acquisition shall pass to Lcnder to the extent of the sums secured by this Security Instrument immediately prior to the acquisition. 6. Preservation and Maintenance of Property; Leaseholds. Borrower shall not destroy. damage or substantially change the Property. allow the Property 10 deteriorate or commit waste. If this Security Instrument is on a leasehold. Borrower shall comply with the provisions of the lease, and if Borrower acquires fee title to the Property. the leasehold and fee title shall not mergc unless Lcnder agrces to the merger in writing, 7. Protection of Lender's Rights in the Property; Mortgage Insurance. If Borrower fails to perform the covenants and agreements contained in this Security Instrument. or there is a legal proceeding that may significantly affect Lender's rights in the Property (such as a procecding in bankruptcy. probate, for condemnation or to enforce laws or regulations). then Lender may do and pay for whatever is necessary 10 protect the value of the Property and lender's rights in the Property. Lender's actions may include paying any sums secured by a lien which has priority over Ihis Security Instrument, appearing in court. paying reasonable allorneys' fees and entering on the Property 10 make repairs, Although Lender may take action under this paragraph 7. Lender does not have to do so. Any amounts disbursed by Lender under this paragraph 7 shall become additional debt of Born)wcr ,ecurcd by this Security Instrument. Unless BNrower and Lender agree to other terms of payment. these amounts shall hear mterest from the date of disbursement at the Note rate and shall be payahle. with interest. upon notice from LCl1lkr to Borrower requesting payment. r ( h ~