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<br />Lender may, at any tirne, collect and hold amounts for Escrow Items in an aggregate amount not Co exceed the
<br />maximurn amount Chat may he required for Borrawer's escrow account under the Real Estate Settlement Procedures
<br />Act of 1974, 12 U.B. C. Section 2601 et .seq. and implementing regulations, 24 CFR Part 3500, as they xnay be
<br />amended from time to time ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated
<br />disbursements or disbursements befare the Borrower's payments are available in the account may not b� based on
<br />amounts due for the mortgage insurance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be hald by RESPA, Lender
<br />shall accaunt Co Borrower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any
<br />time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrawer and require Borrower to
<br />make up the shortage as permitted by RESPA.
<br />'1'he Escrow Funds are pled�ed as additional security for all sums secured by thiti Security Instrument. If
<br />Borrower tenders to Lender the full payment of all such sums, Borrower' s account shall be credated with the balance
<br />remaining for al] installment iterns (a), (b), and (c) and any mortgage insurance premium instaliment that Lender has
<br />not become obligated to pay tn the 5ecretary, and Lender shall promptly refund any excess funds to St�rrower.
<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 iterns (a), (b), and (c).
<br />3. Application of Payments. All payxnents under paragraphs 1 and 2 shall be applied by Lender as follows:
<br />First, to the rnortgage insurance premium to be paid by Lender to the Secretary or to the rnqnthly charge by the
<br />Secretary instead of the monthly 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 />�'ifth, ta late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Prpperty, whether
<br />now in existence or subsequently erected, against any hazards, casualtie5, and contingencies, including fire, far which
<br />Lender requires insurance. This insurance shall be maintained in the amounts and for the periads that Lender
<br />requirea. Borrower shall also insure all improvements an the Property, whether now in existence or subsequently
<br />erected, a�ainst loss by floods to the extent required by the Secretary. All insurance sha11 be carried wiCh companies
<br />approved by Lender. The insurance policies and any renewals shall b� 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 immediate notice by mail. Lender may make proof of loss if not
<br />made promptly by Borrower. Each insuxance company concerned is hereby authorized and directed to make payment
<br />for such losa directly to Lender, instead of to Borrower 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 Security Instrument, first to any delinquent amounta applied in the order in paragraph 3, and th�n to prepayment.
<br />of principal, or (b) to the restoratian or repair of the damaged Property. Any application of the proceeds to the
<br />principal shall not extend or postpone the due date of the monthly payments which are referred to in paragraph 2, or
<br />change the amount of such payxnanta. 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 transfer of title to the Property that extinguishes
<br />the indebtedness, all right, title and interest of Borrower in and to insurance policies in forc� shall pass to the
<br />purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower' s Loan Apptication;
<br />Leaseholds. Borrower shall occupy, establish, and use the Property as $orrower' 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 Box s principal residence for at least one year after the date of
<br />occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating
<br />circumstanccs exist which are be ond Borrower's control. Borrower shall noti Lender of an extenuatin
<br />D451015175
<br />FHA �eed of Trusl-NE 4/86
<br />Woter�s Kluwer Finencial Services T� VMP4R( aga�3 9
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