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L UNIFORM COVENANTS. Borrowcr and Lender covenant and agree a~ r"II(1\\" 1. Payment of Principal and Interest; Prepa)'ment and LlIte Charp,es. Borrower ,hall promptly pay when due the principal of and interest on the debt evidenccd by the Note and any prepayment and late charge, dll': under the Note. 2, Funds for Taxes and Insurance. Sublect to applicable law or to a Wrllten wan er by Lender. Borrower shall pay to Lender on the day monthly payments arc due under the Note. until the Note is paid in full. a ~um ("Funds") equal 10 one-twelfth of: (a) yearly taxes and assessments \\ Inch Illay a:taln priority over thiS Secunty Instrument: (b) yearly leasehold payments or ground rents on the Properly. d any, (c) yearly hazard insurance premIums: and (d) yearly mortgage insurance premiums, if any. These items arc utlled "e~crnw Items." Lender may estimate the Funds due on the basis of current data and reasonable estimates of future eSl'1 (l\\ Items The Funds shall be held in an institution the depOSits or an:(lunts of whIch are insured or guaranteed hy a federal or state agency (including Lender if Lender IS such an InstitutIon) l.ender shall apply the Funds to pay the escrow items. Lender may not charge for holding and applying the Funtb. analynng the account or verifying the escrow items. unless Lender pays Borrower interest on the Fund~ and applrcahl<: law perrnlt~ Lender to make such a charge Borrower and Lender may agree in writing that interest shall be paid on the Fund~. 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 arc pledged as additional security for the sums secured by this Security Instrument. If the 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 ex<.:ess shaH be. at Borrower's option, either promptly repaid to Borrower or credited to Borrower on monthly payments of Funds. If the amount of the 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 111 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 liS 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 1I1terest due: and last. to prinCIpal due, 4. Charges; Liens, Borrower shall pay all taxes, assessments. charges, fines and impositIOns attributable to the Property which may attain priority over this Security Instrument. and leasehold payments or ground rents, if any. Borrower shall pay these obligations in the manner provided in paragraph 2. or ifnot paid III 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 these payments directly. Borrower shal! promptly fUfllish to Lender receipts evidencing the payments. Borrower shall promptly disdlar3e any lien which has priority over this Security Instrument unless Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to Lender: (b) contests III good faith the lien by, or defends against enforcement of the lien in, legal proceedings which in the Lender's opinion operate to prevent the enforcement of the lien or forfeiture of any part of the Property; or (c) secures from the holder of the lien an agreement satisfactory to Lender subordinating the lien to this Security Instrument. If Lender determines that any part of the Property is subject to a lien which may attain priority over this Security Instrument. Lender may give Borrower 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. S. Hazard Insurance. Borrower shall keep the improvements now existing or hereafter erected on the Property insured against loss by fire, hazards included within the term "extended coverage" 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 insurance carrier providing the insurance shall be chosen by Borrower subject to Lender's approval which shall not be unreasonably withheld. All insurance policies and renewals shall be acceptable to Lender and shall include a standard mortgage clause. Lender shall have the right to hold the policies and renewals. If Lender reqt1ires. Borrower shall promptly give to Lender all receipts of paid premiums and renewal notices. In the event of loss. Borrower shall give prompt notice to the insurance carrier and Lender. Lender may make proof ofIoss if not made promptly by Borrower. Unless Lender and Borrower otherwise agree in writing, insurance proceeds shall be applied to restoration or rep:.ir of the Property damaged. if the restoration or repair is economically feasible and Lender's secunty is not lessened. If the restoration or repair is not economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied to the 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 answer within 30 days a notice from Lender that the insurance carrier has offered to settle a claim, then Lender may collect the insurance proceeds. Lender may use the proceeds to repair or restore the Property or to pay sums secured by this Security Instrument. whether or not then due. The 3D-day period will begin when the notice is given. Unless Lender and Borrower otherwise agree in writing, any application of proceeds to principal shall not extend or postpone the due date of the monthly payments referred to in paragraphs I and 2 or change the amount 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 Lender 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 suhstantlally change the Property, allow the Property to 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 nOI merge unless Lender agrees to the merger 111 writing. 7. Protection of Lender's Rigllts 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 proceeding in bankruptcy. probate. for condemnation or to enforce laws or regulations), Ihen Lender may do and pay for whalever is necessary to protect the value of the Property and Lender's nghts in the Properly. Lender's aclions may indude paying any sums secured by a lien which has priority over this Secunty Instrument. appearing in court, paying reasonable attorneys' fees and entenng on the Property to 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 BOrr(lWer <'ecured b\ till'- Secunty Instrument. unless Borrower and Lender agree to other terms of payment, these amounts shall heallntere" frolll the date of dIsbursement at the Note rate and shall be payable, wuh mterest. upon notIce from I ender II' B<lrTt1\\er requesting payment. 88- 100B57 r-- ~. "'.