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<br />If the arnounts held by Lendc:r for Escrow Iteins exceed th� amounts permitted to be held by RFSPA, Lender
<br />shall account to Bc�rrower fc�r lhe excess funds as required by RI:SPA. If the amounts of funds held by T.ender at any
<br />tiine are nat sufficienl lo pay lhe Escrow Iteins when duc, Lender may notify the Borrower and require Borrower to
<br />rnakc; up the shortage as permitted by RESPA.
<br />The �scrow Funds are pledged as additinnal security for all sums secured by this Security Instrument. It
<br />Borrower tcnders to T.ender the full payment of all such sums, �orrower's account shal! be crediked with the balancG
<br />rernainin� for all installment items (a), (b), and (c) and any mortgage insurance premium inslallment that L.ender has
<br />not become obligated tc� pay lc� lhe Secretary, and Lender shall promptly refund any excess funds to 13orrower.
<br />Immediately prior lo a forcclosure sale of the Property c�r its acquisition by L.ender, Borrowcr'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 fc�llows:
<br />First, to the mortgage insurance premium to be paid by L,ender to the Secretary or to the monthly c;harge by the
<br />Sccretary instead of the monthly mortgage insurance premium;
<br />Second, to any taxes, special asse5smcnts, leasehold payments aar ground rents, and fire, flood and c�lher hazard
<br />insurance premiums, as required;
<br />Third, to interest due under the NUte;
<br />I'ourth, to amortization of the principal of thc Note; and
<br />Pifth, to late charges due under the Notc.
<br />4. Fire, Flood and Other Hazard Insnrance. Borrower shall insur�: �tll improvements on the Property, whether
<br />now in existence or subsequently erected, a}�ainst any hazards, casualtir:s, and contingencies, including fire, fbr which
<br />I�ender requires insurance. 'lfiis insurance shall be maintained in thc amounts and for the periods that Lender
<br />requires. Borrower shall also insure all improvements on the Prapcarty, whether now in existence or subsequently
<br />erected, against loss by flc�ods ta the extent required by the Sccretary. All insurance shall be carried with companies
<br />a�proved by Lender. The insurance pc�licies and any renewals shall be held by Lender and shall include loss payxbl�
<br />clauses in favor of, and in a form acecplable to, Lender.
<br />In lhe event of loss, Borrower shall give Lender immediate natice by mail. Lender may make prnc�f of loss if not
<br />rnade promptly by I3orrower. Each insurancc; company concerned is h�rcby authorized and directed tv make payment
<br />for suc:h loss directly to Lender, instead caf to Borrower and to Lender jointly. All or any part c�t lhe insurance
<br />procecds may be applied by Lender, al its option, either (a) to the reduction of the indebtedness under the Note and
<br />this Sccurity Instrument, first to any delinquent amounts applied in ihe order in paragraph 3, and lhen to prepaymen[
<br />of principal, or (b) to the restoratian c�r repair of the damaged Property. Any application nf the proceeds to the
<br />principal shall not extend c�r postpc�ne the due date of the mpnlhly payments which are re:ferred to in paragraph 2, or
<br />change the amount of such payments. Any excess insurancc proceeds over an amount rcyuired to pay all outstanding
<br />indebtedness under thc Notc and this Security Instrument tihall be paid to the entity legally entitled thereto.
<br />In thc event of foreclosure of this Security Instrument or other transfer of title to the Yroperty that extinguishes
<br />the indebtedness, all right, title and interest of 13�rrower in and to insurance p�licies in force shall pass to the
<br />purchaser.
<br />S. Occupancy, Preservation, Maint�nance and Protection ot' the Property; BorrUwer's Loan Applicatian;
<br />Leuseholds. Borrower shall occupy, eslablish, and use th� Property as Borrovver's principal residence within sixty
<br />days after the execution pf this Security Tnstruinent (or wilhin sixty days of a laker sale or transfer of the Property)
<br />and shall continue to accupy the Property as Borrower's principal residencc for at least one year aflcr the date of
<br />occupancy, unless L.ender determines that requirement will cause undue hardship for Borrower, or uriless extenuating
<br />circumstances exist which are beyond Borrowc:r's control. Borrower shall notify L.ender af any extenuating
<br />circumstances. Borrower shall nat cc�mmit waste or destrc�y, damage or substanl"►a11y change the Properly or allow the
<br />Property to deteriorate, reasonablc: wcar and tear excepted. I,ender may inspect the Property if the Property is vacant
<br />or abandoned or the loan is in defaull. Lender may take reasonable action to prote�t and preserve such vacant or
<br />� �ssoi�
<br />Page 3 af 8 Initl � .��
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