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<br />Lender may, at any timc, callcct and hald amounts for Escrow Items in an aggregate amount not to exceed the
<br />maximum a�nount that may bc requircd far Borrower's escrow account under the Real �st�te Settlement I'rocedures
<br />Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing re�;ulations, 24 CFR Part 3500, as they may be
<br />amcndcd from time to time ("RESPA"), except that thc cushion or reserve permitted by I2ESPA for unanticipated
<br />disbursemcnts or disbursements before the Borrower's payments are available in the account m�y not be based on
<br />amounts due for the mortgage insurance premium.
<br />If the amounts held by I�ender for �scrow Items exceed the amounts permitted to be held by RESPA, Lender
<br />sha11 account to $arrowcr for the excess funds as required by RESPA, If the amaunts of funds held by Lendcr at any
<br />time are not sufficient to pay the Escrow Ttems when due, Lender may notify the Borrower and require Borrower to
<br />makc up thc shorta�;e as permittcd by RESPA.
<br />The Escrow Funds are pledged 1s additional security for all sums secured hy this Security Instrument. If
<br />Borrower tenders to Lendcr 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 rnortgage insurance prerniurn installmenc that Lender has
<br />not become obligated to pay to the Secretary, and Lender shall promptly refund any excess funds to F3orrower.
<br />Imrnediately prior to a foreclosure sale of Che Property or its acquisition by Lender, Borrower's account sha11 be
<br />credited with any balance remaining for all installments for items (a), (b), and (c).
<br />3. Application of Payments. All payments undcr paragraphs 1 and 2 shall be applicd by Lcndcr 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 instea�l of thc monthly mortga�e insurancc 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 thc principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. �ire, Flood and Other Hazard Insurance. Borrower sh�l] insure all improvements on the Pro�erty, whether
<br />now in existence or subsequently erected, againsc any hazards, casualties, and conlingencies, including fire, for which
<br />Lcndcr requires insurancc. This insurance shall be maintained in the amounts and for the periods that Lender
<br />requires. Borrower shall also insure all improvements on the Property, whether now in existence or subsequenlly
<br />erected, against loss by floods to the extent required by the Secretnry. 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 />clauscs in favor of, and in a forin acceptable to, Lender.
<br />In the event oF loss, Borrower shall give Lender iirunediate notice by rnail. Lender may inake proof of loss if not
<br />made pcomptly by Borrower. Each insurance company concerned is hereby auihorized and directed to make payment
<br />for such loss directly to Lender, instead of Co Borrower and to Lcndcr jointly. All or any part of thc insurancc
<br />proceeds may be applied by Lender, at its option, either (a) to the reduelion of lhe indebtedness under the Note and
<br />this Security Instrument, first lo any delinquent amounts �pplied in the order in paragraph 3, and then to prcpaymcnt
<br />of principal, or (b) to the restoration or repair of ihe damaged Propercy. Any application of the proceeds to the
<br />principal shall not extend or postpone the due date of the manfhly payments which arc refcrred to in paragraph 2, or
<br />change the amount of such payments. Any excess insurance proceeds over an arnount required to pay all outstanding
<br />indebtedness under the Note and this Security Inslrurnent 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 indcbtedness, all right, title and intcrest of Borrower in and to insurance policies in force shall pass to the
<br />purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Barrawer's Laan Applicatinn;
<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 Borrower's principal residence far at least one ycar after the date of
<br />occupancy, unless Lender determines th�t requirement will cause undue hardship for Borrower, or unless extenuating
<br />circuunstances exist which are beyond Borrower's control. Borrower shall notify Lender of any extenuating
<br />circumstances. $orrpwer sh�ll not commit wastc or destroy, damage or substantially change the Property or allow the
<br />Property to deteriorate, reasonable wear and tear excepted. Lender may inspecl the Property iF the Properiy is vacant
<br />or abandoned or the loan is in default. Lender rnay takc reasonable action to prqtect and prescrvc such vacant or
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