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<br />If the amounts held by I.ender for Escrow Ttems cxcecd the amounts permittcd lc� be held by RE5PA, Lender
<br />shall acuc�unt to Borrower for fhe c.xcess funds as required by RESPA. If the amounts of funds held by Lender at any
<br />time are not sufficient to pay khe Escrow Items when due, Lend�r may notify the Borrower and require Borrower to
<br />n�aka up Ihe shortage as permittcd by RESPA.
<br />Thc I'sscrow Funds are pledged as additional security for all suzns secured by this Sccurity Instrurnent. If
<br />Borrower tenders to L.ender thc: full payrnent of all such surns, Borrower's account shall be creditcd with the balance
<br />rcmaining for all installment items (a), (b), and (c) and any m�rkgage insurance premium inskallment that Lender has
<br />not become obligated to pay to the Secretary, and Lender shall promptly refund any �xcess funds to Borrower.
<br />Imrnediately prior to a foreclosure sale of the Property pr its acquisition by T.,ender, 13arrower's account shall be
<br />credited with any balancc remaining for all installments for items (a), (b), and (c).
<br />3. Application of Payments. All payments under paragraphs 1 and 2 shall ba applied by L.ender as follows:
<br />First, ic� the mortgage insurance premium ta be paid by T.,ender to thc Secretary or to the monthly chargc by the
<br />Secretary instead of the monthly mortgage insurance premium;
<br />Second, lo any taxes, special assessmenks, leasehold payments or ground rents, and fire, flood and other hazard
<br />insurance premiums, as required;
<br />Tfiird to interest due under the Nate;
<br />Fourth, to amortization af the principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. Fire, Flood and Uther Hazard Insurance. Borrower shall insure all improvements on th� Property, whether
<br />now in existence or subsequently erected, against any hazards, casualCi�s, and contingencies, including fire, for which
<br />I.ender requires insurance. This insurance shall be maintained in tk�r: amaunts and for the periods that Lcndcr
<br />requires. Borrower shall alsa insure all improvements on the Property, whether now in existence or subsequenlly
<br />crcctcd, against loss by f]oods kcr ihc: e;xtent required by the Secretary. All insurance shall be carried with companies
<br />approved by Lender. "I'he insurance policies and any renewals shall bc held by I�ender and shall include loss payablc
<br />clauses in favor of, and in a fonn acceptable to, Lender.
<br />In the event of loss, Bc�rrower shall give L.ender immediate noticc by mail. Lender may make proof of loss if nat
<br />made prouiptly by Borrower. Each insurance company concaz�ned is hereby authorized and directed ta make payrnent
<br />for such loss directly tc� Lender, instead of to Borrc�wcr and to L,ender jointly. All or any part of lhc insurance
<br />proceeds may bc applied by Lender, at its option, cithCr (a) to the reduction of the indebtedness under thc Note and
<br />this Security Instrument, first to any delinquent amc�unts applied in the order in paragraph 3, and tkaen La prepayment
<br />of principal, or (b) ta the restoration or repair of ihe damaged Property. Any application af the pr��ceeds to the
<br />principal shall not extend or postpone the due date of thc mc�nthly payments which are referred to in paragraph 2, ar
<br />change the amount of such payments. Any excess insurance proe�e.ds avear an amount required to pay all oulstanding
<br />indebtedness under the Note and this Security Tnstrument shall hc paid to the entity legally entitled thereto.
<br />In the event of foreclosure of lhis Security Instrument or other transfer of title to thc Praperty that extinguishes
<br />the indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the
<br />pur�haser.
<br />5. Oc�upancy, Preservation, Maintenance and Protection of the Property; Borrow�r's Lc�an Applic:atian;
<br />Lcas�holds. Borrower shall occupy, esfablish, and ase the Property as Borrower's principal residcncc within sixky
<br />days after the execution of this Security Instrument (ar wikhin sixty days of a later sale or transfer of the Property)
<br />and shall cantinue to occupy the Property as I3arrc�wer's principal residence for at least one year aPter thc cia[u af
<br />occupancy, unless I,ender determines that requireament will e.ause undue hardship for Borrower, or unless extenuating
<br />circumstances exist which are beyond B�rrower's cantrol. Borrower snarr notify I,ender of any extenua[ing
<br />circnrnstances. Borrower shall not commit waste or destroy, damage or substantially change ihc Property or allow the
<br />Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Prop�rty if the Property is vacant
<br />or abandoned or the loa❑ is in default. Lender may take reasonable action tn protect and preserve such vacant or
<br />��4R�NE) Issotl Page 3 of 8 �nitia���
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