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201103397 Lender may. at any time. collect and hold amounts for Escrow Items in an aggregate amount not to exceed the maximum amount that may be required far Borrower's escrow account under the Real Estate Settlement Procedures Act of 1974. 12 U.S.C. Section 2601 el sect, and implementing regulations, 24 CFR Part 3500, as they may be amended From time to time ("RESPA "), except that the cushion or reserve permitted by RL" "•SPA for unanticipated disbursements or disbursements belorc the Borrower's payments are available in the account may not be based on amounts due for the mortgage insurance premium. 11' the amounts held by Lcnder tar Escrow Items exceed the amounts permitted to be held by RESPA, Lender shall account to Borrower For the excess funds as required by RESPA. II'the amounts of lands held by Lender at any time are not sufficient to pay the Escrow Items when due. Lender may notily the Borrower and require Borrower to make up the shortage as permitted by RI---SPA. The Escrow Funds are pledged as additional security For all sums secured by this Security Instrument. II' Borrower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the balance remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become obligated to pay to the Secretary, and Lender shall promptly refund any excess Funds to Borrower. Immediately prior to a Ioreclosure sale of' the Property or its- acquisition by Lender, Borrower's account shall be credited with any balance remaining for all installments f'or items (a), (b), and (c). 3. Application of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as lallows: First. to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortgage insurance premium: Second. to any lazes. special assessments. leasehold payments or ground rents, and fire. flood and other hazard insurance premiums. as required, Third_ to interest due under the Note: Fourth. to amortization of the principal ol'thc Note: and Filth, to late charges due under the Note. 4. Piro, Flood and Other Hazard Insurance. Borrower shall insure all improvements oil the Property, whether now in existence or subsequently erected, against any hazards, casualties, and contingencies, including fire, fir which Lender requires insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also insure all improvements on the Property. whether now in existence or subsequently erected, against loss by Iloods to the extent required by the Secretary. All insurance shall be carried with companies approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor ol.. and in a lorm acceptable to. Lcndcr. In the event of loss. Borrower shall give Lender immediate notice by mail. Lender may make prool' of loss if not made promptly by Borrower. Each insurance company concerned is hereby authorized and directed to male payment lar such loss directly to Lender. instead of to Borrower and to Lender .jointly. All or any part of' the insurance proceeds may be applied by Lender, at its option. either (a) to the reduction of the indebtedness under the Note and this Security Instrument. lirsl to any delinquent amounts applied in the order in paragraph 3, and then to prepayment ol' principal_ or (b) to the restoration or repair of the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of -the monthly payments which are referred to in paragraph 2. or change the amount of' such payments. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled thereto. In the event of foreclosure oI'this Security Instrument or other transfer ol'tide to the Property that extinguishes the indebtedness, all right. title and interest of Borrower in and to insurance policies in lorec shall pass to the purchaser. 5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan Application; Leaseholds. Borrower shall occupy. establish. and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer ol'the Properly) and shall continue to occupy the Property as Borrower's principal residence for at least one year afler the date of occupancy, unless Lender determines that requirement will cause undue hardship far Borrower, or unless extenuating circumstances exist which are beyond Borrower's control. Borrower shall notily Lender of any extenuating circumstances. Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deteriorate, reasonable wear and tear excepted. Lender may inspect the Properly if the Property is vacant or abandoned or the loan is in delault. Lender may take reasonable action to protect and preserve such vacant or 2011 - 17413241 100049700011788169 8124 Initials: )-r,a VMPCh)- 4N(NE7(0407).ot Page of 6