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Earh monthly~ installment for items (a), (b), and (c) shall equal one-twelfth of the annual amounts, as reasonably estimated
h~ Lender, plus an amount sufficient to maintain an additianal balance of not more than c~ne-sixth of the estimated amounts.
I tu full annual amount for each itzm shall be accumulated by L~n~ier within a peri~~ ending one month before an item wouid
become definquent. l.ender shall hold the amounts collected in trust to pay items (a), (b), and (c) before they become delinquent.
If at any time the total of'the pa~~ments held by Lender for items (a), (b), and (c), tagether with the future monthly payments
fur such items payable to Lender prior to the due dat~s of such items, erceeds by more than one-sixth the estimated amount
ut payrnents required to pay such items when due, and if payments on the Note are current, then Lender shall either refund
~he excess over one-sixth ot the estimated payments or credit the excess over one-sixth of ihe estimat~d payments to subsequent
~~ayments by Borrower, at the option of Borrower. If the total of the payments made by Borrow~er for item (a), (b), or (c)
i, insufficient to pay the item when due, then Borrower shall pay to Lender any amount necessary to make up the deficiency
un or before the date the item becomes due.
As used in this Security Instrument, "Secretary" means the Secretary of Housing and Urban Development or his or her
designee. Most Security Instruments insured by the Secretary are insured under programs which require advance payment of
the entire mortgage insurance premium. If this Security Instrument is or was insured under a progrant which did not require
:idvance payment ot'the entire mortgage insurance premium. then each monthly payment shall also include either: (i) an installment
~~f the annuai mortgage insurance premium to be paid by Lender to the Secretary, or (ii) a monthly charge instead of a mortgage
insurance premium if this Security lnstrument is held by the Secretary. Each monthly installment of the mortgage insurance
E~remium shall be in an amount sufficient to accumulate the full annual mortgage insurance premium with Lender one month
prior to the date the full annual mortgage insurance premium is due to the Secretary, or if this Security Instrument is held
b~~ the Secretary, each monthly charge shall be in an amount equal to one-twelfth of one-half percent of the outstanding principal
balance due on the Note.
If Borrower tenders to Lender the full payment of all sums secured by this Security Instrument, Borrower's account shall
be rredited with the balance remaining for all installments for 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
r.o Borrower. Immediately prior to a foreclosure sale of the Property or its acquisition by Lender, Borrower's account shall
be credited with any balance remaining for all installments for items (a), (b), and (c).
3. ApplicAtion of Payments. Alt payments under paragraphs 1 and 2 shall be applied by Lender as follows:
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, unless Borrower paid the entire mortgage insurance premium when this
Security lnstrument was signed;
Second, to any taxes, special assessments, leasehold payments or ground rents, and fire, flood and other hazard insurance
~remiums, as required;
Third, to interest due under the Nore; ~
Fourth, to amortization of the principal of the Note;
Fifth, to late charges due under the Note. j
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4. Fire, Flood and Other Hazard tnsurance. Borrower shall insu:e all improvements on the Property, whether now in
~ ~~istenre or subsequently erected, against any hazards, casualties, and contingencies, including fire, for which Lender requires
insurance. This insurance shall be maintained in the amounts and for the periods that Lender requires. Borrower shall also
I insure all improvements on the Property, whether now in existence or subsequently erected, against loss by floods to the extent ~
' reyuired by the Secretary. AI{ 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 of, and in a form acceptable to, Lender.
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; In the event of loss, Borrower shall give Lender immediate notice by mail. Lender may make proof of loss if not made ~
; promptly by Borrower. F.ach insurance company concerned is hereby authorized and directed to make payment for such loss
~ directly to Lender, instead of to Borrower and to Lender jointly. All or any part of the insurance proceeds may be applied
i by Lender, at its option, either (a) to the reduction of the indebtedness under the Note and this Security 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 the proceeds to the principal shalf 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 !
E paid to the entity legally entitled thereto. ~
s In the event of foreclosure of this Security Instrument or other transfer of title to the Property that extinguishes the ,
~ indebtedness, all right, title and interest of Borrower in and to insurance policies in force shall pass to the purchaser. ,
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~ 5. Preservation and Maintenance of the Property, Leasehoids. Borrower shall not commit waste or destroy, damage or
~ ~ubstantially change the Property or allow the Property to deteriorate, 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. If this Security Instrument is on a leasehold, Borrower shall comply with
tFie provisions of the lease. If Borrower acquires fee title to the Property, the leasehold and fee titte shall not be merged unless
~ L~nder agrees to the merger in writing.
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6. Charges to Borrower and Protectioo of Lender's Rights in the Property. Borrower shall pay all governmental or municipal
~ charges, ~nes and impositions that are not included in Paragraph 2. Borrower shall pay these abligations on time directly to
i the entity which is owed the payment. If failure to pay woul~ adversely affect Lender's interest in the Property, upon Lender's
request Borrower shall promptly furnish to Lender receipts evidencing these payments.
[f Borrower fails to make these payments or the payments required by Paragraph 2, or fails to perform any other covenants
an~+ agreements contained in this Security Instrument, or there is a legal proceeding tha[ may significantly affect Lender's rights
in the Property (such as a proceeding in bankruptcy, for condemnation or to enforce laws or regulations), then Lender may
do and pay whatever is necessary to protect the value of the Property and Lender's rights in the Property, inciuding payment
of taxes, hazard insurance and other items mentioned in Paragraph 2.
Any amounts disbursed by Lender under this Paragraph shall become an additional debt of Borrower and be secured
~ b~~ this Security Instrument. These amounts shall bear interest from the date of disbursemer.t, at the Note rate, and at the
$ o~tion of Lender, shall be immediately due and payable.
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~ 7. Condemnation. The proceeds of any award or daim for damages, direct or consequential, in connection with any
~ ~_ondemnation or other taking of any part of the Property, or for conveyance in pface of condemnation, are hereby assigned
; and shall be paid to Lender to the extent of the full amount of the indebtedness that remains unpaid under the Note and this
Security Instrument. Lender shaff apply such proceeds to the reduction of the indebtedness under the Note and this Security
Instrument, first to any delinquent amounts applied in the order provided in Paragraph 3, and then to prepayment of principal.
PaRe 2 of 4 6001( U7~ PACE125~d
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