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002238 -2- UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows: 1. Payment of Principal and interest. Borrower shall promptly pay when due the principal and interest indebtedness evidenced by the Note, including any variations resulting from changes in the contract rate, and other charges as provided in the Note. j 2. Funds for Taxes and Insurance. Subject to applicable law or waiver by Lender, Borrower shall pay to Lender on the day monthly payments of principal and interest are payable under the Note, until the Note is paid in full, a sum (herein "Funds ") equal to one - twelfth of the yearly taxes and assessments (including condominium and planned unit development assessments, if any) which may attain priority over this Mortgage and ground rents on the Property, if any, plus one - twelfth of yearly premium installments for hazard insurance, plus one- twelfth of yearly premium installments for mortgage insurance, if any, all as reasonably estimated initially and from time to time by Lender on the basis of assessments and bills and reasonable estimates thereof. Borrower shall not be obligated to make such payments of Funds to Lender to the extent that Borrower makes such payments to the holder of a prior mortgage or deed of trust if such holder is an institutional lender. If Borrower pays Funds to Lender, the Funds shall be held in an institution the deposits or accounts of which 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 said taxes, assessments, insurance premiums and ground rents. Lender may not charge for so holding and applying the Funds, analyzing said account or verifying and compiling said assessments and bills, 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 at the time of execution of this Mortgage that interest on the Funds shall be paid to Borrower, and unless such agreement is made or applicable law requires such 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 Mortgage. If the amount of the Funds held by Lender, together with the future monthly installments of Funds payable prior to the due dates of taxes, assessments, insurance premiums and ground rents, shall exceed the amount required to pay said taxes, assessments, insurance premiums and ground rents as they fall due, such excess shall be, at Borrower's option, either promptly repaid to Borrower or credited to Borrower on monthly installments of Funds. if the amount of the Funds held by Lender shall not be sufficient to pay taxes, assessments, insurance premiums and ground rents as they fall due, Borrower shall pay to Lender any amount necessary to make up the deficiency in one or more payments as Lender may require. Upon payment in full of all sums secured by this Mortgage, Lender shall promptly refund to Borrower any Funds held by Lender. If under paragraph 17 hereof the Property is sold or the Property is otherwise 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 Mortgage. 3. Application of Payments. Unless applicable law provides otherwise, or unless interest on the Note is precomputed, all payments received by Lender under the Note and paragraphs 1 and 2 hereof shall be applied by Lender first in payment of amounts payable to L.endcr by Borrower under paragraph 2 hereof, then to interest payable at the applicable contract rate, and then to the principal of the Note. 4. Prior Mortgages and Deeds of Trost; Charges; Liens. Borrower shall perform all of Borrower's obligations under any mortgage, ,mod of trust or other security agreement with a lien which has priority over this Mortgage, including Borrower's covenants co make payments when due. Borrower shall pay or cause to be paid all taxes, assessments and other charges, fines and impositions attributable to the Property which may attain a priority over this Mortgage, and leasehold payments or ground rents, if any. 4. 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 such other hazards as Lender may require and in such amounts and for such periods as Lender may require. The insurance carrier providing the insurance shall be chosen by Borrower subject to approval by Lender; provided, that such approval shall not be unreasonably withheld. All insurance policies and renewals thereof shall he in a form acceptable to Lender and shall include a standard mortgage clause in favor of and in a form acceptable to Lender. Lender shall have the right to hold the policies and renewals thereof, subject to the terms of any mortgage, deed of trust or other security agreement with a ljen which has priority over this Mortgage. in the event of loss. Borrower shall give prompt notice to the Insurance carrier and Lender. .ender may make proof of loss if not made promptly by Borrower. If the Property is abandoned by Borrower, or if Borrower falls fo respond to Lender within 30 days from the date notice is mailed by Lender to Borrower that the insurance carrier offers to settle a claim for insurance benefits, Lender is authorized to collect and apply the insurance proceeds at Lender's option either to restoration or repair of the Property or to the sums secured by this Mortgage. 6. Preservation mad Maintenance of Property; Leaseholds; Condominiums; Planned Unit Developments. Borrower shall keep the Property in good repair and shall riot commit waste or permit impairment or deterioration of the Property and shall comply with the provisions of any lease if this Mortgage is on a leasehold. If this Mortgage is on a unit in a condominium or a planned unit development, Borrower shall perform all of Borrower's obligations under the declaration or covenants creating or governing the condominium or planner+ unit development, the by -laws and regulations of the condominium or planned unit development, and constituent document%. 7. Protection of Leader's Security. If Borrower fails to perform the covenants and agreements contained in this Mortgage, or if any action or proceeding is commenced which materially affects Lender's interest in the Property, then Leader, at L"dcr's option, upon notice to Borrower, may make such appearances, disburse such aunts, including reasonable attorneys' fees, and take such action as is necessary to protect Lcnder's interest. If tender required mortgage insurance as a condition of snaking the loan secured by this Mortgage, Borrower shall pay the Ilrennums required io L maintain such Insurance In effect Until such time its the requirement lot such Insurance terminates ill accordallcc with 13oorrowcr't and Lender's written agrcernent or applicable law. Any amounts disbursed by Lender pursuant iii this paragraph'', with interest thereon al 111e ,ip1111cah11^ k 11111 ALI Pale, %hall become additional tndebteditess of "of towel Secured by' this MorlgaKe. lidless Borromrr and I rtldet apirc 1„ other terms of payment, such ainoutlts shall he payable Upon notwe It <,m i ender Ill norto"vi lt'gncsilnli t'a \ili ill lilrrr,q Nothing contamed In this paragraph 7 %hall require i. ender to Incul any ckpensf ,,l I;ikv'Ilia I'llo:, hv!r1111,1C1 4. Iaspectimt, I,rnder may make or Cause to he made reasonable rnrrles til -n mw In +t,r l,. 1, 1 ;, pitivwdedihat I.erider %limit give B„tiower rioln;e tlrillt to ativ such inspection %tle,'1141ngj r,:ac„llilhlc ul,i Iylaiett