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<br />Lender may, at any time, collect and hold amounts for Escrow items in an aggregate amount not to exceed the
<br />maximum amount that may be rcquircd for Borrower's escrow accouTTt under the Real Estate Settlement Procedures Act
<br />of 1974, 12 U.S.C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500, as they may be amended
<br />from time to time ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated disbursements
<br />or disbursements before the Borrower's payments are available in the accomit may not be based on amounts due for the
<br />mortgagc insurancc premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RISPA, Lender shall
<br />account to Borrower for die excess funds as rcquircd by RESPA. If die amounts of funds held by Lender at any time are
<br />not sufficient to pay the Escrow Items when due, Lender may notify die Borrower and require Borrower to make up the
<br />shortage as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If Borrower
<br />tenders to Lender the full payment of all such sums, Borrower's account shall be credited wish the balance remaining far
<br />all installment items (a), (b), and (c) and any mortgage insurancc prcinium installment that Lender has not become
<br />obligated to pay to die Secretary, and Lender shall promptly refund any excess funds to Borrower. Immediately prior to
<br />a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall be credited wide any balance
<br />remaining for all installments for items (a), (b), and (c).
<br />3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />First, to the mortgagc insurancc premium to be paid by Lender to the Secretary or to the monthly charge by the
<br />Secretary instead of the montllly mortgage insurance premium;
<br />Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard
<br />insurance premiums, as required;
<br />Third, to interest due under the Note;
<br />Fourth, to amortization of die principal of the Note; and
<br />Fifth, to late charges due under the Nose.
<br />4. Fire, Flood and Other Ilazard Insurance. Borrower shall insure all improvements on the Property, whether
<br />now in existence or subsequently erected, against any hazards, casualties, and contingencies, including tire, for which
<br />Lcndcr requires insurancc. 't'his insurance shall be maintained in the amounts and for the periods that Lender requires.
<br />Borrower shall also insure all improvements on the Property, whether now in existence or subsequently erected, against
<br />loss by floods to the extent required by the Secretary. All insurance shall be carried with companies approved by bender.
<br />The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and
<br />in a form acceptable to, Lender.
<br />In the event of lass, Borrower shall give bender 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 for
<br />such loss directly to Lcndcr, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may
<br />be applied by Lender, at its option, either (a) to the reduction of tlic indebtedness under the Note and this Security
<br />Instrument, Grst to any delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or
<br />(b) to die restoration or repair of the dainagcd Property. Any application of the proceeds to the principal shall not extend
<br />or postpone the due date of the monthly payments which are referred to in paragraph 2, or change the amount of such
<br />payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note
<br />and this Security Instrument shall be paid to the entity legally entitled t7TCreto.
<br />In die event of foreclosure of dais Security Instrument or odicr transfer of title to the Property drat extinguishes the
<br />indebtedness, all right, tide and interest of Borrower in and to insurancc. policies in force shall pass to die purchaser.
<br />S. occupancy, Pretiervation, Maintenance and Protection of the Property; Borrower's Loan Application;
<br />Leaseholds. Borrower shall occupy, establish, and use die Property as Borrower's principal residence within sixty days
<br />after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall
<br />continue to occupy the Property as Bvrrower's principal residence for at least one year after the date of occupancy,
<br />unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances
<br />exist which are beyond Borrower's control. Borrower shall notify Lcndcr of any extenuating circumstances. Borrower
<br />shall not commit waste or destroy, damage or substantially change t1Te Property or allow the Property to deteriorate,
<br />reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or die loan is
<br />in default. Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower
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