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<br />Lender may, at any time, collect and hold amounts for Escrow Iterns in 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, 12 U.S.C. Section 2601 et seq. and implementing regulatians, 24 CFR Part 3500, as they may be
<br />amended from time to tirne ("RESPA"), except that the cushion or reserve permitted by RESPA for unanticipated
<br />disbursements or disbursements before the Borrower's payments are available in the account may not be based on
<br />amounts due for the mo�tgage insurance premium.
<br />If the amounts held by Lender for Escrow Iterns 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 arnounts of funds held by Lender at any
<br />time are not sufficient to pay the Escrow Items when due, Lender may notify the Borrower and require Barrower to
<br />make up the shortage as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security Instrument. If
<br />Borrower tenc�ers 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 rnortgage insurance premiurn installrnent that Lender has
<br />not becorne obligated to pay to the Secretary, and I.ender shall promptly refund any excess funds to Borrower.
<br />Immediately prior to a foreclosure sale of the Property ar 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 under paragraphs 1 and 2 shall be applied by L,Qnder as follows:
<br />First, to the mortgage insurance prerniurn to be paid by Lender to the Secretary or to the rnonthly charge by the
<br />Secretary instead of the monthly mortgage insurance prernium;
<br />Second, ta any taxes, special assessments, leasehold payments or ground rents, and �re, flood and other hazaxd
<br />insurance premiums, as required;
<br />Third to inter�st due under the Note;
<br />Fourth, to amortization of the principal of the Note; and
<br />Pifth, to late charges due under the Note.
<br />4. Ffre, Flood and Other Hazard Insurance. Barrawer sha11 insure all innprovements on the Property, whether
<br />now in existence ar subsequently erected, against any hazards, casualties, and contingencies, including �re, for which
<br />Lender requires insurance. This insurance shall be maintained in the arnounts and for the periods that Lender
<br />requires. Borrower shall also insure all improvements on the Property, whether now in existence or subsequently
<br />erected, against loss by floods to the extent required by the Secretary. All insurance sha11 be carried with companies
<br />approved by Lender. The insurance policies and any renewals sha11 be held by Lender and shall include lass payable
<br />clauses in favor af, and in a form acceptable to, L.ender.
<br />In the event of loss, Barrawer shall give Lendsr immediate notice by mail. Lender may make proof of loss if not
<br />made promptly by Borrowex. Each insurance company concerned is hereby authorized and directed to rnake payrnent
<br />for such loss directly to L.ender, insCead of to Sorrower and to Lender jointly. All or any part of the insurance
<br />proceeds may be applied by L,Qnder, at its option, either (a) to the reduction of the indebtedness under the Note and
<br />this Security Instrurnent, first to any delinquent amounts applied in the order in paragraph 3, and th.en to prepayment
<br />of principal, or (b) to the restoration or repair af 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 payments. 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 Barrower in and to insurance policies in force sha11 pass ta the
<br />purchaser.
<br />5. Occupancy, Preservation, Maintenance and Frotection of the Property; Borrower's I.aan Application;
<br />Leaseholds. Borrovver 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 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 />circumstances exist which are be ond Borrower's control. Borrower shall noti Lender of an extenuatin
<br />FHA peed of 7rusANE 4/96
<br />VMP � A2 �� VMPARINEI (0809)
<br />Wolters Kluwer Financial SerWces V� Page 3 of 9
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