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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 aznaunt that rnay be required for Sorrower's escrow account under the Real Estate Settlement Pracedures
<br />Act of 1974, 12 U. S. C. Section 2601 et seg. and implementing regulations, 24 CFR Part 3500, as they may be
<br />amended from time to tune ("RES�A" ), except that the cushion or reserve permitted by RESPA for unanticipated
<br />disbursements or disbursements before the Horrower' s payments are available in the account xnay not be based on
<br />amounts due far the mortgage insurance prernium.
<br />If th� amounts held by Lender for Escrow Items excead the amounts permitted to be held by RESPA, Lender
<br />sha11 account to Sorrower for the excess funds as required by RESPA. If the arnounts of funds held by Lender at any
<br />time are not suff3cient to pay the Escrow Items when due, Lender may notify the Barrawer and require Bonower to
<br />make up the shortage as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for a11 sums secured by this Security Instrument. If
<br />Sorrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance
<br />remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has
<br />not becorne obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to Horrower.
<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 instaliments for items (a), (b), and (c).
<br />3. Application of P�yments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />First, to the mort�age insurance premium to be paid by Lender to the Secretary or to the monthly charge by the
<br />Secretary instead of the xnanthly mortgage insurance premium;
<br />Second, to any taxes, special assessments, leasehold payments or grpund rents, and �re, flood and other hazard
<br />insurance premiums, as required;
<br />Third, to interest due under the Note;
<br />Fourth, to amnrtization of the principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insuranee. Borrower shall insure all irnprovements on the Property, whether
<br />now in exiscence or subsequently erected, against any hazards, casualties, and cantingencies, including fire, for which
<br />Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender
<br />requires. Borrower shall also insure all improvements on the Prope�rty, whether now in exist�nce or subsequently
<br />erected, against loss by floads 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 of, and in a form acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender irnmediate notice by mail. Lender may make proof of loss if not
<br />made promptly by Borrower. Each insurance company conc�rned is hereby authorized and directed to mak� payrnent
<br />for such loss directly to Lender, instead of to Sorrower 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 reduction of the indebtedness under the Note and
<br />this 5ecurity 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. Any application of the proceeds to the
<br />principal shall not extend or post�aone the due date of the monthly payments which are referred to in paragraph 2, or
<br />change the amount of such payment�s. Any excess insurance proceeds over an amount required to pay all outstanding
<br />indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto.
<br />In the event of foreclosure of this Security Instrument or other transf�r of title to the Property that extinguishes
<br />the indebtedness, all right, title and interest of Borrower in and to insurance policies in farce shall pass to the
<br />purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Praperty; Sorrower' 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 Instrument (or within sixty days of a later sale or transfer of the Property)
<br />and shall continue to occupy the Property as Horrawer's principal residance for at least one y�ar after the date of
<br />occupancy, unless Lender determines that requirement will cause unduc hardship for Horrower, ar unless extenuating
<br />circumstances exist which are be ond Borrower's control. Borrower shall noti Lender of an extenuatin
<br />FHA De9d of Trust-NE o451012520
<br />4/96
<br />VMP4R(N� (0808)
<br />VMP@ Pa e3of9
<br />Wolters Kluwer Financiel Services 9
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