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20i�0715� mo gage insurance premium to be paid by Lender to the S�retary, or (ii) a monthly chazge instead of a mo gage insurance premium if this Security Instrument is held by the Se�retary, in a reasonable amount to be d termined by the Secretary. Except for the monthly charge by the Secretary, these items aze called "Es row Items" and the sums paid to Lender aze called "Escrow Funds." Len er may, at any time, collect and hold amounts for Escrow Items in an aggregate amount not to exceed the ' um amount that may be required for Borrower's escrow account under the Real Estate Settlement Pr ures Act of 1974, 12 U.S.C. Section 2601 et seq. and implementing regulations, 24 CFR Part 3500, as ey may be amended from time to time ("RESPA"), except that the cushion or reserve permitted by A for unanticipated disbursements or disbursements before the Bonower's payments are available in the ccount may not be based on amounts due for the mortgage insurance premium. If th amounts held by Lender for Escrow Items excced the amounts permitted to be held by RESPA, Lender shal account to Bonower for the excess funds as required by RESPA. If the amounts of funds held by Len er at any time are not sufficient to pay the Escrow Items when due, Lender may norify the Borrower and ' e Boirower to make up the shortage as permitted by RESPA. The row Funds are pledged as additional s�urity for all sums secured by this S�urity Instrument. If Bo ower tenders to Lender the full payment of all such sums, Borrower's account shall be credited with the bal ce remaining for all installment items (a), (b), and (c) and any mortgage insurance premium installment that nder has not be�ome obligate�i to pay to the Secretary, and L,ender shall promptly refund any excsss fun to Borrower. Immediately prior to a foreclosure sale of the Property or its acquisirion by Lender, Bo ower's account shall be credited with any balance remaining for all installments for items (a), (b), and (c). 3. App�lication of Payments. All payments under paragraphs 1 and 2 shall be applied by Lender as follows: Firs , to the mortgage insurance premium to be paid by Lender to the Secretary or to the monthly charge by the retary instead of the monthly mortgage insurance premium; nd, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other d insurance premiums, as required; to interest due under the Note; to amortization of the principal of the Note; and to late chazges due under the Note. 4. Fire Flood and Other Hazard Insurance. Bonower shall insure all improvements on the Properly, wh er now in existence or subsequently erected, against any hazards, casualries, and contingencies, incl ' g fire, for �ich Lender requires insurance. Tfiis insurance shall be maintained in the amounts and for �aeriods t.�at �r requires. Borro�ver shall alsc� insure all improvements on the Pro�rty, whether a�aw � existence o� �bsequuerrtly erected, a�ainst loss by floc�ds to the extent aequirer� by th� Se�retary. All shail be ca�� with com�►acsi� �pprove� by I�nder. '�'he �*+a»�ce policies and any renewais shall be 13 by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, Lender. �a eve�t of loss, ��rc�vver shall give Lentier imme�iate notice by mail. Lender may make praof of loss if �t PromPtlY b3' �arrovver. Each ins�ance company conc�rnerl is hereby authorizQd and directed to mak payment for such loss dire�tly to Lender, instead of to Borrower and to Lender jointly. All or any part of e insurance proceeds may be appliai by Lender, at its oprion, either (a) to the reduction of the inde tedness under the Note and this Securiry Instrument, first to any delinquent amounts applied in the ord in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the daznaged Pro rty. An lication of the roceeds to the rinci al shall not extend or one the due date of the FHA Deed of �rusriNE VMP p Wolters Kluw r Financial Services aiss VMP4RWE) (1105) Page 3 of 10