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<br />loan No. <br /> <br />In the event of loss, Borrower shall give lender immediate notice by mail. lender may make proof of loss if not <br />made promptly. by Borrower. Each insurance company concerned is hereby authorized and directed to make payment <br />for such loss directly to lender, instead of to Borrower and to lender jointly. All or any part of the insurance proceeds <br />may be appli~d by lender,. at its option, either (a) to .the reductio~ of the indebtedness under the Note and this Security <br />Instrument, first to any delinquent amounts applied In the order In Paragrah 3, and then to prepayment of principal, or <br />(b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not <br />extend or postpone the due date of the monthly payments which are referred to In Paragraph 2, or change the amount <br />of such payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness <br />under the Note and this Security Instrument shall be paid to the entity legally entitled thereto. <br /> <br />200804690 <br /> <br />In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the <br />indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser. <br /> <br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's loan Application; <br />leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty <br />days after the execution of this Security Interest (or within sixty days of a later sale or transfer of the Property) and shall <br />continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, <br />unless lender determines this requirement will cause undue hardship for Borrower, or unless extenuating <br />circumstances exist which are beyond Borrower's control. Borrower shall notify lender of any extenuating <br />circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the <br />Property to deteriorate, reasonable wear and tear expected. lender may inspect the Property if the Property is vacant <br />or abandoned or the loan is in default. lender may take reasonable action to protect and preserve such vacant or <br />abandoned Property. Borrower shall also be in default if Borrower, during the loan application process, gave materially <br />false or inaccurate information or statements to lender (or failed to provide lender with any material information) in <br />connection with the loan evidenced by the Note, including, but not limited to, representations concerning Borrower's <br />occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold, Borrower shall <br />comply with the provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee title shall <br />not be merged unless lender agrees to the merger in writing. <br /> <br />6. Charges to Borrower and Protection of lender's Rights In the Property. Borrower shall pay all <br />governmental or municipal charges, fines and impositions that are not included in Paragraph 2. Borrower shall pay <br />these obligations on time directly to the entity which is owed the payment. If failure to pay would adversely affect <br />lender's interest in the Property, upon lender's request Borrower shall promptly furnish to lender receipts evidencing <br />these payments. <br /> <br />If Borrower fails to make these payments or the payments required by Paragraph 2, or fails to perform any other <br />covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly <br />affect lender's rights in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or <br />regulations), then lender may do and pay whatever is necessary to protect the value of the Property and lender's <br />rights in the Property, including payment of taxes, hazard insurance and other items mentioned in Paragraph 2. <br /> <br />Any amounts disbursed by lender under this paragraph shall become an additional debt of Borrower and be <br />secured by this Security Instrument. These amounts shall bear interest from the date of disbursement, at the Note rate, <br />and at the option of lender, shall be immediately due and payable. <br /> <br />Borrower shall promptly discharge any lien which has priority over this Security Instrument unless Borrower; (a) <br />agrees in writing to the payment of the obligation secured by the lien in a manner acceptable to lender; (b) contests in <br />good faith the lien by, or defends against enforcement of the lien in, legal proceedings which in the lender's opinion <br />operate to prevent the enforcement of the lien; or (c) secures from the holder of the lien an agreement satisfactory to <br />Lender subordinating the lien to this Security Instrument. If lender determines that any part of the Property is subject <br />to a lien which may attain priority over this Security Instrument, lender may give Borrower a notice identifying the lien. <br />Borrower shall satisfy the lien or take one or more of the ations set forth above within 10 days of the giving of notice. <br /> <br />7. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with <br />any condemnation or other taking of any part of the Property, or for conveyance in place of condemnation, are hereby <br />assigned and shall be paid to lender to the extent of the full amount of the indebtedness that remains unpaid under the <br />Note and this Security Instrument. lender shall apply such proceeds to the reduction of the indebtedness under the <br />Note and this Security Instrument, first to any delinquent amounts applied in the order provided in Paragraph 3, and <br />then to prepayment of principal. Any application of the proceeds to the principal shall not extend or postpone the due <br />date of the monthly payments, which are referred to in Paragraph 2, or change the amount of such payments. Any <br />excess proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security <br />Instrument shall be paid to the entity legally entitled thereto. <br /> <br />a. Fees. lender may collect fees and charges authorized by the Secretary. <br /> <br />9. Grounds for Acceleration of Debt. <br /> <br />(a) Default. lender may, except as limited by regulations issued by the Secretary, in the case of payment <br />defaults, require immediate payment in full of all sums secured by this Security Instrument if: <br /> <br />(i) Borrower defaults by failing to pay in full any monthly payment required by this Security Instrument prior <br />to or on the due date of the next monthly payment, or <br /> <br />(Ii) Borrower defaults by failing, for a period of thirty days, to perform any other obligations contained in this <br />Security Instrument. <br /> <br />NE FHA DOT 1/96 <br /> <br />1/96 <br /> <br />Page 3 of 6 <br /> <br />t1!L <br /> <br />MY <br />~ <br />l <br />