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<br />in a reasonable amount to be determined by the Secretary. Except for the monthly charge by the Secretary, these
<br />items are called "Escrow Items" and the sums paid to Lender are called "Escrow Funds."
<br />Lelxder may, at aruy time, collect and held amonnts for Escrow Items lan an aggregate amount not to exceed the
<br />maximum amount that may be required for Borrower's escrow account under the Real Estate Settlement Procedures
<br />Act of 1974, 1Z U.S.C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500, as they may be
<br />amended from time to tune ("RESPA"), except that the cushion ar reserve permitted by RESPA for unanticipated
<br />disbursements or disbursements before the Borrower's payments are available iw the account may not be based an
<br />amounts due for the mortgage insurance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender
<br />shall account to Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any
<br />time are not suffident to pay the Escrow Items when due, Lender may notify the Borrower and require Borrower to
<br />make up the shortage as permitted by 12ESPA.
<br />The Escrow Funds are pledged as additional security far all sums secured by this Security Instrument. If
<br />Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance
<br />remaining far all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has
<br />not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Borrower.
<br />Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall be
<br />credited with any balance 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 mortgage insurance prenuum to be paid by Lender to the Secretary or to the monthly charge by the
<br />Secretary instead of the montlily 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 the principal of the Note; and
<br />Fifth, to late charges due under the Nate.
<br />4. Fire, Flood and O#her Hazard Insun~:ence. Borrorer snail insure alI unprovements on t?.e Property, tislnether
<br />noev in existence or subsequently erected, against any hazaz•ds, casualties, and contingencies, including ire, for which
<br />Lender requires insurance. This insurance shall be maintained in the amounts and for the periods tha# Lender
<br />requires. Borrower shall also insure all improvements on the Froperty, whether now in existence or subsequently
<br />erected, against loss by floods to the extent required by the Secretary. All insurance shall be carried with companies
<br />approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable
<br />clauses in favor af, and in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall glue Lender in~rnediate notice by mail. Lender may make proof of loss if not
<br />made promptly by Borrower. Each insurance company concerned is hereby authorized and d'ir'ected tv make payment
<br />for such loss directly tv Lender, instead of to Harrower and to Lender jointly. All or any part of the insurance
<br />proceeds may be applied by Lender, at its option, either (a) to the reductron of the indebtedness under the Note and
<br />this Security Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment
<br />of principal, or (b) to the restoration or repair of the damaged Property. Arry application of the proceeds to the
<br />principal shall not extend ar postpone the due date of the monthly payments which are referred to in paragraph; 2, or
<br />change the amount of such payments. Any excess insurance proceeds over an amount required to pay alI outstanding
<br />indebtedness under the Note and this Security Instrument shall be paid to the entrty legally entrtred thereto.
<br />In the event of foreclosure of this Security Insdvment ar other transfer of tide to the Property that extinguishes
<br />the indebtedness, alt right, title and interest of Harrower in and to insurance polides in force shall pass to the
<br />purchaser.
<br />321-273494$-703
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<br />W W W.T70CSDII2ECT. CQM
<br />1~17~I2048
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