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<br />BORROWER COVENANTS that Borrower is lawfully seized of the estate hereby conveyed and
<br />has the right to grant and convey the Property and that the Property is unencumbered, except for
<br />encumbrances of record. Borrower warrants and will defend generally the title to the Property against all
<br />claims and demands, subject to any encumbrances of record.
<br />THIS SECURITY INSTRUMENT combines uniform covenants for national use and non-uniform
<br />covenants with limited variations by jurisdiction to constitute a uniform security instrument covering real
<br />property.
<br />Borrower and Lender covenant and agree as follows:
<br />IJNIFORM COVENANTS.
<br />1. Payment of Principal, Interest and Late Charge. Borrower shall pay when due the principal of,
<br />and interest on, the debt evidenced by the Note and late charges due under the Note.
<br />2. Monthly Payment of Taxes, Insurance, and Other Charges. Borrower shall include in each
<br />monthly payment, together with the principal and interest as set forth in the Note and any late charges, a sum
<br />for (a) taxes and special assessments levied or to be levied against the Property, (b) leasehold payments or
<br />ground rents on the Property, and (c) premiums for insurance required under Paragraph 4. In any year in
<br />which the Lender must pay a mortgage insurance premium to the Secretary of Housing and Urban
<br />Development ("Secretary"}, or in any year in which such premium would have been required if Lender still
<br />held the Security Instrument, each monthly payment shail also include either: (i) a sum for the annual
<br />mortgage insurance premium to be paid by Lender to the Secretary, or (ii) a monthly charge instead of a
<br />mortgage insurance premium if this Security Instrument is held by the Secretary, in a reasonable amount to
<br />be determined by the Secretary. Except for the monthly charge by the Secretary, these items are called
<br />"Escrow Items" and the sums paid to Lender are called "Escrow Funds."
<br />Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to
<br />exceed the maximum amount that may be required for Borrower's escrow account under the Real Estate
<br />Settlement Procedures Act of 1974, 12 U.S.C. § 2601 et seq• and implementing regulations, 24 CFR Part
<br />3500, as they may be amended from time to time ("RESPA"), except that the cushion or reserve permitted by
<br />RESPA for unanticipated disbursements or disbursements before the Borrower's payments are available in
<br />the account may not be based on amounts due for the mortgage insurance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by
<br />RESPA, Lender shall account to Borrower for the excess funds as required by RESPA. If the amounts of
<br />funds held by Lender at any time are not sufficient to pay the Escrow Items when due, Lender may notify the
<br />Borrower and require Borrower to make up the shortage as permitted by RESPA.
<br />The Escrow Funds are pledged as additional security for all sums secured by this Security
<br />Instrument. If Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be
<br />credited with the balance remaining for all installment items (a), (b), and (c) and any mortgage insurance
<br />premium installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly
<br />refund any excess funds to Borrower. Immediately prior to a foreclosure sale of the Property or its
<br />acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments
<br />for items (a), (b), and (c).
<br />3. Application of Payments. All payments under Paragraphs 1 and 2 shall be applied by Lender as
<br />follows:
<br />First, to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly
<br />charge by the Secretary instead of the monthly mortgage insurance premium;
<br />Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and
<br />other hazard insurance premiums, as required;
<br />Third, to interest due under the Note;
<br />Fourth, to amortization of the principal of the Note; and
<br />Fifth, to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the
<br />Property, whether now in existence or subsequently erected, against any hazards, casualties, and
<br />contingencies, including fire, for which Lender requires insurance. This insurance shall be maintained in the
<br />amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the
<br />Property, whether now in existence or subsequently erected, against loss by floods to the extent required by
<br />the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and
<br />any renewals shall be held by Lender and shall include loss payable clauses in favor of, and in a form
<br />acceptable to, Lender.
<br />In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof
<br />of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and
<br />directed to make payment for such loss directly to Lender, instead of to Borrower and to Lender jointly. All
<br />or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reduction of the
<br />indebtedness under the Note and this Security Instrument, first to any delinquent amounts applied in the order
<br />in Paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged
<br />Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the
<br />monthly payments which are referred to in Paragraph 2, or change the amount of such payments. Any excess
<br />insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this
<br />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
<br />extinguishes the indebtedness, all right, title and interest of Borrower in and to insurance policies in force
<br />shall pass to the purchaser.
<br />5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
<br />Application; Leaseholds. Borrower shall occupy, establish, and use the Property as Borrower's principal
<br />residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale
<br />or transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for at
<br />least one year after the date of occupancy, unless Lender determines that requirement will cause undue
<br />hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control.
<br />Borrower shall notify Lender of any extenuating circumstances. Borrower shall not commit waste or destroy,
<br />damage or substantially change the Property or allow the Property to deteriorate, reasonable wear and tear
<br />excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default.
<br />Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower
<br />shall also be in default if Borrower, during the loan application process, gave materially false or inaccurate
<br />information or statements to Lender (or failed to provide Lender with any material information) in
<br />connection with the loan evidenced by the Note, including, but not limited to, representations concerning
<br />Borrower's occupancy of the Property as a principal residence. If this Security Instnxment is on a leasehold,
<br />16256.CV (11/07) 904995 Page 2 of 5
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