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<br />Lender may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the
<br />maximum amount that may be required for Borrower's escrow account under the Rea1 Estate Settlement Procedures
<br />Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500, as they may be
<br />amended from time to time ("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 mortgage insurance premium.
<br />If the amounts held by Lender for Escrow Items exceed the amounts permitted to be held by RESPA, Lender
<br />sha11 account to Bonower for the excess funds as required by RESPA. If the amounts of funds held by Lender at any
<br />time aze not sufficient to pay the Escrow Items when due, Lender ma.y notify the Borrower and require Bonower 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 />Bonower tenders to Lender the fu11 payment of a11 such sums, Bonower' s account sha11 be credited with the balance
<br />remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has
<br />not become obligated to pay to the Sectetary, and Lender shall promptly refund any excess funds to Bortower.
<br />Immedia#ely prior to a foreclosure sale of the Property or its acquisition by Lender, Bonower's account sha11 be
<br />credited with any balance r�aining for a11 installments for itexns (a), (b), and (c).
<br />3. Application of Payments. All payments under pazagraphs 1 and 2 sha11 be applied by Lender as follows:
<br />Firs to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the
<br />Secretazy instead of the monthly mortgage insurance premium;
<br />Secon to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard
<br />insurance pramiums, as required;
<br />Thir� to interest due under the Note;
<br />Fourt to amortization of the principal of the Note; and
<br />Fi to late charges due under the Note.
<br />4. Fire, Flood and Other Hazard Insnrance. Bonower shall insure all improveinents on the Property, whether
<br />now in existence or subsequently erected, against any hazazds, casualties, and contingencies, including fire, for which
<br />Lender requires insurance. This insurance sha11 be maintained in the amounts and for the periods that Lender
<br />requires. Bonower 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 shall be carried with companies
<br />approved by Lender. The insurance policies and any renewals shall be held by Lender and sha11 include loss payable
<br />clauses in favor o� and in a form acceptable to, Lender.
<br />In the event of loss, Bonower shail give Lender imnnediate notice by mai1. Lender may make proof of loss if not
<br />made promptly by Bonower. Each insurance company concerned is hereby authorized and directed to make payment
<br />for such loss directly to Lender, instead of to Bonower and to Lender jointly. All or any part of the insurance
<br />proceeds may be applied by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and
<br />this Security Instrument, first to any delinquent axnounts applied in the order in paragraph 3, and then to prepayment
<br />of principal, or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the
<br />principal sha11 not e�ctend or postpone the due date of the monthly payments wluch are referred to in paragraph 2, or
<br />change the amount of such payments. Any excess insurance proceeds over an amount required to pay al1 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 Sectuity Instrument or other transfer of title to the Property t1�at extinguishes
<br />the indebtedness, all right, title and interest of Borrower in and to insurance policies in force sha11 pass to the
<br />pwchaser.
<br />5. Occupancy, Pteservation, Maintenance and Protection of the Property; Borrower's Loan Application;
<br />Leasehoids. Bonower sha11 occupy, establish, and use the Property as Borrower's principal residence within sixty
<br />da.ys after the execution of this Security Instrument (or within sixty da.ys of a later sale or transfer of the Property)
<br />and sha11 continue to occupy the Properiy as �rrower' s principal residence for at least one year after the date of
<br />occupancy, unless Lender determines that requirement will cause undue hardship for Bonower, or unless extenuating
<br />circumstances exist which are beyond Borrower's control. Borrower sha11 notify Lender of any extenualing
<br />circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or a11ow the
<br />Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Property if the Properiy is vacant
<br />or abandoned or the loan is in default. Lender ma.y take re.asonable action to protect and preserve such vacant or
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