## Attachment 1

FHA Case No.

# PROMISSORY NOTE

\[Date\]

\[Property Address\]

1\. PARTIES

"Borrower" means each person signing at the end of this Note, and the
person's successors and assigns. "Secretary" or "Lender" means the
Secretary of Housing and Urban Development and its successors and
assigns.

2\. BORROWER'S PROMISE TO PAY

Borrower promises to pay to the order of Lender, the lesser of U.S. \$
\[Amount of total advance partial claim to be inserted by Mortgagee\]
(the "principal sum) or as much of that sum as may be disbursed for the
benefit of Borrower(s) by Lender.

3\. PROMISE TO PAY SECURED \[omit this paragraph in Texas and renumber
accordingly\]

Borrower's promise to pay is secured by a mortgage, deed of trust or
similar security instrument that is dated the same date as this Note and
called the "Security Instrument." The Security Instrument protects the
Lender from losses, which might result if Borrower defaults under this
Note.

4\. MANNER OF PAYMENT

\(A\) Time

> On , \[insert maturity date of insured primary mortgage\] or, if
> earlier, when the first of the following events occurs:
>
> \(i\) Borrower has paid in full all amounts due under the primary Note
> and related mortgage, deed of trust or similar Security Instruments
> insured by the Secretary, or
>
> \(ii\) The maturity date of the primary Note has been accelerated, or
>
> \(iii\) The primary note and related mortgage, deed of trust or
> similar Security Instrument are no longer insured by the Secretary, or
>
> \(iv\) The property is not occupied by the purchaser as his or her
> principal residence.

\(B\) Place

> Payment shall be made at the Office of Housing FHA-Comptroller,
> Director of Mortgage Insurance Accounting and Servicing, 451 Seventh
> Street, SW, Washington, DC 20410 or any such other place as Lender may
> designate in writing by notice to Borrower.

5\. BORROWER'S RIGHT TO REPAY

Borrower has the right to pay the debt evidenced by this Note, in whole
or in part, without charge or penalty. If Borrower makes a partial
prepayment, there will be no changes in the due date or in the amount of
the monthly payment unless Lender agrees in writing to those changes.

6\. WAIVERS

Borrower and any other person who has obligations under this Note waive
the rights or presentment and notice of dishonor. "Presentment" means
the right to require Lender to demand payment of amounts due. "Notice of
dishonor" means the right to require Lender to give notice to other
persons that amounts due have not been paid.

7\. OBLIGATIONS OF PERSONS UNDER THIS NOTE

If more than one person signs this Note, each person is fully and
personally obligated to keep all of the promises made in this Note,
including the promise to pay the full amount owed. Any person who is a
guarantor, surety or endorser of this Note is also obligated to do these
things. Any person who takes over these obligations, including the
obligations of a guarantor, surety or endorser of this Note, is also
obligated to keep all of the promises made in this Note. Lender may
enforce its rights under this Note against each person individually or
against all signatories together. Any one person signing this Note may
be required to pay all the amounts owed under this Note.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants
contained in this Note.

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(SEAL)

Borrower

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(SEAL)

Borrower

FHA Case No.

# SUBORDINATE MORTGAGE

THIS SUBORDINATE MORTGAGE ("Security Instrument") is given on , 20 . The
Mortgagor is

Whose address is

("Borrower"). This Security Instrument is given to the Secretary of
Housing and Urban Development, and whose address is 451 Seventh Street,
SW, Washington, DC 20410 ("Lender"). Borrower has agreed to repay to
Lender, the lesser of U.S. \$ \[Amount to be inserted by Mortgagee\] or
as much of that sum as may be disbursed for the benefit of Borrower(s)
by Lender. This debt is evidenced by Borrower's note dated the same date
as this Security Instrument ("Note"), which provides for the full debt,
if not paid earlier, due and payable on\_\_\_\_\_\_\_\_\_\_\_\_. This
Security Instrument secures to Lender: (a) the repayment of the debt
evidenced by the Note, and all renewals, extensions and modifications of
the Note; (b) the payment of all other sums, advanced under Paragraph 7
to protect the security of this Security Instrument; and (c) the
performance of Borrower's covenants and agreements under this Security
Instrument and the Note. For this purpose, Borrower does hereby
mortgage, warrant, grant and convey to the Lender, with the power of
sale the following described property located in County, State:

which has the address of \[Street\]

\[City\],

\[State\] \[Zip Code\], ("Property Address");

TOGETHER WITH all the improvements now or hereafter erected on the
property, and all easements, appurtenances, and fixtures now or
hereafter a part of the property. All replacements and additions shall
also be covered by this Security Instrument. All of the foregoing is
referred to in this Security Instrument as the "Property."

BORROWER COVENANTS that Borrower is lawfully seized of the estate hereby
conveyed and has the right to mortgage, grant and convey the Property
and that the Property is unencumbered, except for encumbrances of
record. Borrower warrants and will defend generally the title to the
Property against all claims and demands, subject to any encumbrances or
record.

THIS SECURITY INSTRUMENT combines uniform covenants for national use and
non-uniform covenants with limited variations by jurisdiction to
constitute a uniform security instrument covering real property.

Borrower and Lender covenant agree as follows:

UNIFORM COVENANTS.

1\. **Payment of Principal**. Borrower shall pay when due the principal
of the debt evidenced by the Note.

2\. **Borrower Not Released; Forbearance By Lender Not a Waiver.**
Extension of the time of payment of the sums secured by this Security
Instrument granted by Lender to any successor in interest of Borrower
shall not operate to release the liability of the original Borrower or
Borrower's successor in interest. Lender shall not be required to
commence proceedings against any successor in interest or refuse to
extend time for payment or otherwise modify amortization of the sums
secured by this Security Instrument by reason of any demand made by the
original Borrower or Borrower's successors in interest. Any forbearance
by Lender in exercising any right or remedy shall not be a waiver of or
preclude the exercise of any right or remedy.

3\. **Successors and Assigns Bound; Joint and Several Liability;
Co-signers**. The covenants and agreements of this Security Instrument
shall bind and benefit the successors and assigns of Lender and
Borrower. Borrower's covenants and agreements shall be joint and
several. Any Borrower who co-signs this Security Instrument but does not
execute the Note: (a) is co-signing this Security Instrument only to
mortgage, grant and convey that Borrower's interest in the Property
under the terms of this Security Instrument; (b) is not personally
obligated to pay the sums secured by this Security Instrument; and (c)
agrees that Lender and any other Borrower may agree to extend, modify,
forbear or make any accommodations with regard to the term of this
Security Instrument or the Note without that Borrower's consent.

4\. **Notices**. Any notice to Borrower provided for in this Security
Instrument shall be given by delivering it or by mailing it by first
class mail unless applicable law requires use of another method. The
notice shall be directed to the Property Address or any other address
Borrower designates by notice to Lender. Any notice to Lender shall be
given by first class mail to: Department of Housing and Urban
Development, Attention: Single Family Notes Branch, 451 Seventh Street,
SW, Washington, DC 10410 or any address Lender designates by notice to
Borrower. Any notice provided for in this Security Instrument shall be
deemed to have been given to Borrower or Lender when given as provided
in this paragraph.

5\. **Governing Law; Severability**. This Security Instrument shall be
governed by Federal law and the law of the jurisdiction in which the
Property is located. In the event that any provision or clause of this
Security Instrument or the Note conflicts with applicable law, such
conflict shall not affect other provisions of this Security Instrument
or the Note which can be given effect without the conflicting provision.
To this end the provisions of this Security Instrument and the Note are
declared to be severable.

6\. **Borrower's Copy.** Borrower shall be given one conformed copy of
the Note and of this Security Instrument.

NON-UNIFORM COVENANTS. Borrower and Lender further covenant and agree as
follows:

7\. **Acceleration; Remedies**. \[State specific language\]

If the Lender's interest in this Security Instrument is held by the
Secretary and the Secretary requires immediate payment in full under
Paragraph 4 \[insert Paragraph 3 in Texas\] of the Subordinate Note, the
Secretary may invoke the nonjudicial power of sale provided in the
Single Family Mortgage Foreclosure Act of 1994 ("Act") (12 U.S.C. § 3751
et seq.) by requesting a foreclosure commissioner designated under the
Act to commence foreclosure and to sell the Property as provided in the
Act. Nothing in the preceding sentence shall deprive the Secretary of
any rights otherwise available to a Lender under this paragraph or
applicable law.

BY SIGNING BELOW, Borrower accepts and agrees to the terms contained in
this Security Instrument and in any rider(s) executed by Borrower and
recorded with it.

Witness:

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(SEAL)

Borrower

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(SEAL)

Borrower