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201108245 mortgage insurance prcmium to be paid by Lendcr to thc Sccretary, ar(ii) a inonthly chargc instcad of a mortgagc insurancc prcmiuln if this Sccurity Instrumcnt is hcld by thc Sccrctary, in a rcasonable ainount to be dctcrmincd by the Sccretary. Except for thc monthly chargc by thc Secrctary, thcsc itcros arc callcd "Escrow Items" and the sums paid to Lender are called "Escrow Funds." Lender may, at any time, collect and hold amounts for Escrow Itelns in an aggregate amount not to exceed the maximum amount that may be required for Borrower's escrow account under the Real Estate Set[lement Procedures Act of 1974, 12 U_S.C_ Section 2601 et sey_ and implementing regulations, 24 CFR Part 3500, as they may be amended from time to time ("RESPA"), except that the cushion ar reserve pernlitted by RESPA for unanticipated disbursements or disbursements before the Borrower's payments are available in the account may not be based on amounts due for the mortgage insurance premiuin_ If the amounts held by Lender for Escrow Items exceed the ainounts permitted to be held by RESPA, Lender shall account to Borrower for ihe excess funds as required by RESPA. If the amounls uf funds held by Lender al any time are not Sufficient lo pay Lhe F.scrow Ilems when due, Lend�r may nolify lhe Burrower and require Bottower to make up the shortage a� permilted hy RF.SP�_ The Escrow Funds are pledgedas additional security far all sums secured by tliis Security Tnstrument_ If Borrower teuders to Lender the full payment of all such sums, Borrower's account shall be credited with the balanceremaining 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. Iuunediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall be credited with any balance remaining for ail instalhnents for iteins (a), (b), and (c)_ 3. AppliCatlonof Payments. All payinents under paragraphs 1 and 2 shall be applied by Lender as follows: P'irst, to the mortgage insurance premiunl to be paid by Lender to the Secretary or to the monthly charge by the Secretary instead of the monthly mortga�e insurance premium; Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance premiums, as required; Third, to interesY due under the Note; Fourth, to amortization of the principal of thc Notc; and Fifth, to latc chargcs duc undcr thc Notc. 4. Fire, Floodand Other Hazard Insurance.Borrowcr shall insurc all improvcmcnts on thc Property, whether now in existenee or subsequently erected, against any hazards, casualties, and contingencies, inchiding fire, for which Leuder requires insurance. This insurance shall be inaintained in the amounts and far the periods that Lender requires. Borrower shall aiso insirre all improveinents on the Property, whether now in existence or subsequenily erected, against loss by tloods to the extent required by the Secretary_ All insurance shall be carried �vith companies approved by Lender. The insurance policies and any renewals shall be held by Lender and shall include loss payable clauses in favor of, and in a form acceptable to, Lender. In the event of loss, Borrower shall give Lender immediate notice by mail_ Lender uiay make proof of loss if not made promptly by Borrower_ Tach insurance company concerned is hereby authorized and directed to inake payment for such loss directly lo Lender, inslead of lo Bonower and lo Lender joinlly_ All or any purt of the insurance proceeds may be applied by Lender, aL ils o�tion, eilher (a) to lhe reducliun of lhe indebLedneSti under lhe Nole and thi5 S�curiLy Instrumenl, firsl lo any delinquenl amounts applied in ihe order in paragraph 3, and lhen to prepaymenl of principal, or (b) lo the resloratiun or repair of the damaged Property Any application of the proceed� to the principal shall not extend or postpone the due date of the FHA Deed of Trust-NE 4 VMP OO VMP4R(NEy (11D5J.00 Wolters Kluwer Financial Services Page 3 of 10