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<br />200805721
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<br />Loan No.
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<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 applied by Lender, at its option, either (a) to the reduction 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 />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.
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<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.
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<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.
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<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.
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<br />8. Fees. Lender may collect fees and charges authorized by the Secretary.
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<br />9. Grounds for Acceleration of Debt.
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<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:
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<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
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<br />(ii) Borrower defaults by failing, for a period of thirty days, to perform any other obligations contained in this
<br />Security Instrument.
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<br />NE FHA DOT 1/96
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