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Lender may, at any time, collect and hold amounts for Escrow Items h an aggregate amount not to exceed the maximum
<br /> amount that may be required for Borrower's escrow account under the Real Estate Settlement Prxedures Act of 1974, 12 U.S.C.
<br /> " J 2601 g( se°• and implementing regulations, 24 CFR Part 3500, as they may be smended from tkne to time ("RESPA"), except
<br /> that the cushfon or reserve permitted by RESPA for unantkipated dtsbursements or disbursements before the Borrower's
<br /> payments are available in the account may not be based on 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 shall account
<br /> to Borcower for the excess iunds as required by RESPA. If the amounts of tunds held by Lender at any time are not sufficfent to
<br /> pay the Escrow Items when due, Lender may noti(y the BoROwer and require Borrow�to make up the shortage as permitted by
<br /> RESPA.
<br /> The Escrow Funds are pledged as addkional security for all sums secured by this Securtty Instrument. If Borrower tenders �
<br /> to Lender the full payment of all such sums, Borrower's account shell be credked wkh the balance remahing for all tnstalknent '
<br /> kems (a), (b), and (c) and any mortgage insurance premium installment that Lender has not become oblfpated to pay to the
<br /> Secretary, and Lender shall prompty retund any excess funds to Borrower. Immediatey prfor to a foreclosure sale of the Property �
<br /> or ks acquisition by Lender, Borrower's account shall be credited wRh any balance remainin� tor atl installments for items (a), (b), �y
<br /> and (c). �
<br /> 3. Application of Payments. All payments under Paragraphs 1 and 2 shall be applled by Lender as follows: �
<br /> First, to the mortgage insurance premlum to be paid by Lender to the Secretary or to the monthy charge by the Secretary ~;
<br /> instead of the monthly mortgage insurenCe premium; �
<br /> Second, to any texes, special assessments, leasehold payments or yround rents, and fire, fbod end other hazard
<br /> insurance premiums, as required;
<br /> Third, to interest due under the Note;
<br /> Fourth, to amortization of the principal of the Note; and
<br /> Fifth, to late charges due under the Note.
<br /> 4. Fire, Flood and Other Hazard Insurance. BoROwer shali insure all improvements on the Property, whecner
<br /> now in existence or subsequently erected, ageinst any hazards, casuafties, and cont�gencies, including fire, for whbh Lender
<br /> requires insurance. This insurance shall be maintained � the amounts and for the periods that Lender requires. Borrower shall
<br /> also �sure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the
<br /> eMent requked by the Secretary. All insurance shall be carrfed wkh companies approved by Lender. The insurance policies and
<br /> any renewals shall be held by Lender and shall include loss payable clauses h favor of, and h a torm acceptable to, lender.
<br /> In the event of loss, Borrower shall give Lender knmediate not�e by mail. Lender may make proof of loss H not made
<br /> promptly by BoROwer. Each hsurance company concemed is hereby authormed and directed to make payment }or such loss
<br /> directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied by
<br /> Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security Instrument, first to any
<br /> delinquent amounts applied in the order � Paragraph 3, and then to prepayment oi principal, or (b) to the restoration or repaM of
<br /> the damaged Property. Any application of the proceeds to the principal shall not extend or postpone the due date of the
<br /> monthly payments which are referred to M Paragraph 2, or change the amount of such payments. Any excess insurance
<br /> proceeds over an amount required to pay all outstanding �debtedness under the Note and this SecurRy I�strument shall be paid
<br /> to the entity legally entftled thereto.
<br /> In the event of foreclosure of this Securky Instrument or other transfer of tkle to the Property that extinguishes the
<br /> indebtedness, all right, title and interest of Borrower h and to insurance policies in force shall pass to the purchaser.
<br /> 5. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
<br /> Application; Leaseholds. Borrower shell occupy, establish, and use the Property as BoROwer's principal residence within
<br /> sbcty days after the execution oi this Securky Instrument (or within sbcty days of a later sale or transfer of the Property) and shall
<br /> continue to occupy the Property as Borrower's pr�cipal residence for at least one year after the date of occupancy, unless
<br /> Lender determines that requirement will cause undue hardship for Borcower, or unless extenuating ckcumstances exist which are
<br /> beyond BoROwer's control. Bonower shall notify Lender o( any extenuating circumstances. Borrower shali not commit waste or
<br /> destroy, demage or substantially change the Property or allow the Property to deteriorate, reasonable wear and tear excepted.
<br /> Lender may inspect the Property if the Property is vacant or abandoned or the loan fs M default. Lender may take reasonable
<br /> action to protect and preserve such vacant or abandoned Property. Borrower shall also be in defauft if Borrower, during the loan
<br /> application process, gave materfelly false or inaccurate infortnation or statements to Lender (or failed to provide Lender wRh any
<br /> material information) in connection with the loan evidenced by the Note, including, but not fimited to, representations conceming
<br /> Borrowers occupancy of the Property as a principal residence. Ii this Security Instrument is on a leasehold, Borrower shali
<br /> comply with the provisions of the lease. If Borrower acqu�es fee title to the Property, the leasehold and fee title shall not be
<br /> merged unless Lender agrees to the merger in wrking.
<br /> 6. Condemnation. The proceeds of any award or claari for damages, direct or consequential, in connection wfth any
<br /> condemnation or other taking of any part of the Property, or for conveyance in place of condemnetion, ere hereby essigned end
<br /> shall be paid to Lender to the extent oi the full amount of the indebtedness that remains unpaid under the Note and this
<br /> Security Instrument. lender shall apply such proceeds to the reduction of the indebtedness under the Note and this Security
<br /> Instrument, first to any delinquent amounts applied in the order provided in Paragraph 3, and then to prepayment oi principal.
<br /> Any application of the proceeds to the principal sha0 not extend or postpone the due date of the monthly payments, wh�h sre
<br /> refeRed to in Paragraph 2, or change the amount of such payments. My excess proceeds over an amount required to pay all
<br /> outstanding indebtedness under the Note and this Securlty Instrument shall be pald to the entfty legally entftled thereto.
<br /> 7. Charges to Borrower and Protection of Lender's Rights in the Property, eonower snau pay an
<br /> govemmental or municipal charges, fines and impositions that are not inCluded in Paragraph 2. Borrower shall pay these
<br /> obligations on time directly to the entity which is owed the payment. If failure to pay would adversely affect Lenders hterest h
<br /> the Property, upon Lenders request Borrower shall prompty fumish to Lender receipts evidencing these payments.
<br /> If BoROwer fails to make these payments or the payments required by Paragraph 2, or fails to pertorm any other covenants
<br /> and agreements contained in this Security instrument, or there is a legal proceeding that may signfficantly affect Lender's rights in
<br /> the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may do and
<br /> pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, lncluding payment of taxes,
<br /> hazard insurance and other kems mentioned in Paragraph 2.
<br /> FSBi3.LM�(�/BB) Paye 2 of 5
<br /> BB2
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