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201108833 In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made promptly by Bonower. Each insurance company concemed is hereby authorized and directed to make payment for such loss direcdy to Lender, instead of to Borrower and to Lender joindy. All or any part of the insurance proceeds may be applied by Lender, at its option, either (a) to the reducflon of the indebtedness under the Note and this Securlty Instrument, first to any delinquent amounts applied in the order in paragraph 3, and then to prepayment of principal, or (b) to the restoration or repair of the damaged Property. Any application of We proceeds to the principal shall not extend or postpone the due date of the montlily payments which are referred to in paragraph 2, or change the amount of such paymettts. Any excess insurance proceeds over an amount required to pay all outstanding indebtedness w►der the Note and this Security Insrivment shall be paid to the entity legally entitled thereto. In the event of foreclosure of tlus Security Instrument or other transfer of tide to We Property that extinguishes the indebtedness, all right, tifle and interest of Borrower in and to �►surance policies in force shall pass to the purchaser. 5. Occupancy, Preservation, Maintenance and Protection of the Property, Borrower's Loan Application; Leaseholds. Bonower shall occupy, establish, and use the Property as Borrower's prIncipal residence within sixiy days after We execuflon of this Security Instrument (or wlthin sixty days of a later sale or transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Bonower's control. Borrower shall notify Lender of any extenuating circumstances. Bonower shall not commit waste or destroy, damage or substantially change the Property or allow the Property to deterlorate, reasonable wear and tear excepted. Lender may inspect the Property if the Property is vacant or abandoned or the loan is in default. Lender may take reasonable action to protect and preserve such vacant or abandoned Property. Borrower shall also be in default if Borrower, during the loan application process, gave materlally faLse or inaccurate information or statements to Lender (or failed to provide Lender with any material information) in connection wiW We loan evidenced by the Note, including, but not limited to, representations concerning Borrower's occupancy of the Property as a principal residence. If tliis Security Instrument is on a leasehold, Borrower shall comply with the provisions of the lease. ff Bonower acquires fee Htle to the Property, the leasehold and fee title shall not be merged unless Lender agrees to the merger in writing. 6. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in connection with any condemnaflon or other taking of any part of We Property, or for conveyance in place of condemnation, aze hereby assigned and shall be paid to Lender to the extent of We fiill amount of the indebtedness Wat remains unpaid under the Note and ttds Security Inshvment. Lender shall apply such proceeds to We reduction of the indebtedness under the Note and this Securlty Instrument, &st to any delinquent amounts applied in the order provided in paragraph 3, and then to prepayment of principal. Any applicaflon 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 proceeds over an amount required to pay all outstanding indebtedness under the Note and this Security Instrument shall be paid to the entity legally enfltled thereto. 7. Charges to Borrower and Protection of Lender's Rights in the Property. Borrower shall pay all governmental or municipal charges, fines and impositions that are not included in paragraph 2. Borrower shall pay these obligaHons on time direcfly to the enSty which �s owed the payment. If failure to pay would adversely affect Lender's interest in the Property, upon Lender's request Borrower shall promptly furnish to Lender receipts evidencing these payments. If Borrower fails to make these payments or the payments required by paragraph 2, or faiLs to perform any other covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may 1004NNE 000687799958 11/21/201107:OSam FHA Mortgege WITH MERSNE Revised 4/96 Amended 7/04 VMP � VMP4N(N� (1105).00 Wolters Kluwer Flnancial Servicas Paga 4 of 70