Case 20-30438-KLP Claim 3 Filed P6A9/20 | BES° Main Document

13, Relationship to Second Security Instrument.

(a) Second Security Instrument. In order to secure payments which the Secretary may make to or
‘on behalf of Borrower pursuant to Section 255(iX(1)(A) of the National Housing Act and the Loan
Agreement, the Secretary has required Borrower to execute a Second Note and a Second Security

| Instrument on the Property.

(b) Relationship of First and Second Security Instruments. Payments made by the Secretary
shall not be included in the debt under the Note unless: .

(i) This Security Instrument is assigned to the Secretary; or

(ii) The Secretary accepts reimbursement by the Lender for all payments made by the
Secretary.

If the circumstances described in (i) or (ii) occur, then all payments by the Secretary,
including interest on the payments, but excluding late charges paid by the Secretary, shall be
included in the debt under the Note.

(©) Effect on Borrower. Where there is no assignment or reimbursement as described in (bY) or
(ii) and the Secretary makes payments to Borrower, then Borrower shall not:

(i) Be required to pay amounts owed under the Note, or pay any rents and revenues of the
Property under Paragraph 19 to Lender or a receiver of the Property, until the Secretary has
required payment-in-full of all outstanding principal and accrued interest under the Second
Note; or

(ii) Be obligated to pay interest or shared appreciation under the Note at any time, whether
accrued before or after the payments by the Secretary, and whether or not accrued interest
has been included in the principal balance under the Note.

(@) No Duty of the Secretary. The Secretary has no duty to Lender to enforce covenants of the
Second Security Instrument or to take actions to preserve the value of the Property, even though
Lender may be unable to collect amounts owed under the Note because of restrictions in this
Paragraph 13.

14, Forbearance by Lender Not a Waiver. 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.

15, Successors and Assigns Bound; Joint and Several Liability. The covenants and agreements of
this Security Instrument shall bind and benefit the successors and assigns of Lender. Borrower may not
assign any rights or obligations under this Security Instrument or under the Note, except to a trust that
meets the requirements of the Secretary, Borrower's covenants and agreements shall be joint and several.

16. 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 all Borrowers jointly designate.
Any notice to Lender shall be given by first class mail to Lender's address stated herein 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 16.

17. 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.

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

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

19, Assignment of Rents. Borrower unconditionally assigns and transfers to Lender all the rents and
revenues of the Property. Borrower authorizes Lender or Lender's agents to collect the rents and
revenues and hereby directs each tenant of the Property to pay the rents to Lender or Lender's agents.
However, prior to Lender's notice to Borrower of Borrower's breach of any covenant or agreement in the
Security Instrument, Borrower shall collect and receive all rents and revenues of the Property as trustee
for the benefit of Lender and Borrower. This assignment of rents constitutes an absolute assignment and
not a assignment for additiona) security only.

If Lender gives notice of breach to Borrower: (a) all rents received by Borrower shall be held by

RP rant sertiepndort

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Case 20-30438-KLP Claim3 Filed 06/19/20 Desc Main Document
af 6858 1 MEU9T7O
EXHIBIT A

LEGAL DESCRIPTION

ALL THAT certain lot ot parcel of land lying and being in Dale District of Chesterfield County,
Virginia, fronting 100 feet on the western line of New Drewry’s Bluff Road, containing « one acre, and
being described as follows:

Beginning at a point marking the intersection of the northem line of property of Otis Clarke and Joseph
T. Trent, Sr., and the western line of said Road and extending southerly there from along the western
line of said Road, and fronting thereon, 100 feet, and extending back between parallel lines, the
northern line thereof being the northern line of the aforesaid property, said parallel lines being of equal
length, a distance sufficient to make one acre.

IT BEING the same property conveyed to Rose Clarke Parham by deed from Rose Clarke Parham and
James Parham, her husband, dated July 17, 1962 and recorded September 6, 1962 in Deed Book 688 at
page 366 in the Clerk's Office of the Circuit Court for the County of Chesterfield, Virginia.

INSTRUMEN] #4502
RECORDED IN THE CLERK'S OFFICE Ur
CHESTERFIELD ON
FEBRUARY 6s 2009 Al U2: Sort

ORIHINGIGN: CLERK

Y Ls
“ RECORDED BY: mit

Re

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the

Case 20-30438-KLP Claim 3. Filed ngjt0/a

The Calculated Interest Rate will never increase above 13.180%

The Calculated Interest Rate will be adjusted if necessary to comply with the rate limitation(s) described
above and will be in effect until the next Change Date, At any change date, if the Calculated Interest
Ralte equals the Existing Interest Rate, the interest rate will not change.

23, Release. Upon payment of all sums secured by this Security Instrument, Lender shall request
Trustee to release this Security Instrument and shall surrender all notes evidencing debt secured by this
Security Instrument to Trustee. Trustee shall release this Security Instrument. Borrower shall pay any
recordation costs. Lender may charge Borrower a fee for releasing this Security Instrument, but only if
the fee is paid to a third party for services rendered and the charging of the fee is permitted under
applicable law.

24. Substitute Trustee. Lender, at its option, may from time to time remove Trustee and appoint a
successor trustee to any Trustee appointed hereunder. Without conveyance of the Property, the successor
trustee shall succeed to all the ttle, power and duties conferred upon Trustee herein and by applicable
law.

25, Identification of Note. The Note is identified by a certificate on the Note executed by any Notary
Public who certifies an acknowledgment hereto,

26. Compound Interest. At the end of each month, accrued but unpaid interest shall be added to and
made a part of the principal balance as a Loan Advance and shall likewise thereafter accrue interest,

27. Riders to this Security Instrument. If one or more riders are executed by Borrower and recorded
together with this Security Instrument, the covenants of each such rider shall be incorporated into and

shall amend and supplement the covenants and agreements of this Security Instrument as if the rider(s)
were a part of this Security Instrument. [Check applicable box(es),]

1 Condominium Rider (1 Planned Unit Development Rider

other tspecity]

NOTICE: THE DEBT SECURED HEREBY IS SUBJECT TO CALL IN FULL
OR THE TERMS THEREOF BEING MODIFIED IN THE EVENT OF SALE OR
CONVEYANCE OF THE PROPERTY CONVEYED.

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.

(SEAL) 2/2/09

Rose Clarke Parham Date

Page7 of -HECM Fiest Deed Of Tst

c Main Document
Cush?

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Borrower as trustee for benefit of Lender only, to be applied to the sums secured by this Security
Instrument; (b) Lender shall be entitled to collect and receive all of the rents of the Property; and (c)
each tenant of the Property shall pay all rents due and unpaid to Lender or Lender's agent on Lender's
written demand to the tenant.

Borrower has not executed any prior assignment of the rents and has not and will not perform any act
that would prevent Lender from exercising its rights under this Paragraph 19.

Lender shall not be required to enter upon, take control of or maintain the Property before or after giving
notice of breach to Borrower. However, Lender or a judicially appointed receiver may do so at any time
there is a breach. Any application of rents shall not cure or waive any default or invalidate any other
right ot remedy of Lender. This assignment of rents of the Property shall terminate when the debt
secured by this Security Instrument is paid in full.

20, Foreclosure Procedure. If Lender requires immediate payment-in-full under Paragraph 9,
Lender may invoke the power of sale and any other remedies permitted by applicable law. Lender
shall be entitled to collect all expenses incurred in pursuing the remedies provided in this
Paragraph 20, including, but not limited to, reasonable attorneys’ fees and costs of title evidence.

If Lender invokes the power of sale, Lender or Trustee shall give to Borrower, the owner of the
Property, and all other persons, notice of sale as required by applicable law. Trustee shall give
public notice of sale by advertising, in accordance with applicable law, once a week for two
successive weeks in a newspaper having general circulation in the county or city in which any
part of the Property is located, and by such additional or any different form of advertisement the
Trustee deems advisable. Trustee may sell the Property on the eighth day after the first
advertisement or any day thereafter, but not more than 30 days following the last advertisement.
Trustee, without demand on Borrower, shall sell the Property at public auction to the highest
bidder at the time and place and under the terms designated in the notice of sale in one or more
parcels and in any order Trustee determines. Trustee may postpone sale of all or any parcel of the
Property by advertising in accordance with applicable law. Lender or its designee may purchase
the Property at any sale.

Trustee shall deliver to the purchaser Trustee's deed conveying the Property with special
warranty of title. The recitals in the Trustee's deed shalll be prima facie evidence of the truth of
the statements made therein, Trustee shall apply the proceeds of the sale in the following order:
(a) to discharge the expenses of executing the trust, including a reasonable commission to Trustee;
(b) to discharge all taxes, levies, and assessment, with costs and interest if these costs have priority
over the lien of this Security Instrument, including the due pro rata thereof for the current year;
(0) to discharge in the order of their priority, if any, the remaining debts and obligations secured
by this Security Instrument, and any liens of record inferior to this Security Instrument under
which sale is made, with lawful interest; and, (d) the residue of the proceeds shall be paid to
Borrower or Borrower's assigns. Trustee shall not be required to take possession of the Property
prior to the sale thereof or to deliver possession of the Property to the purchaser at the sale.

21. Lien Priority. The full amount secured by this Security Instrument shall have the same priority over
any other liens on the Property as if the full amount had been disbursed on the date the initial
disbursement was made, regardless of the actual date of any disbursement. The amount secured by this
Security Instrument shall include all direct payments by Lender to Borrower and all other loan advances
permitted by this Security Instrument for any purpose. This lien priority shall apply notwithstanding any
State constitution, law or regulation, except that this lien priority shall not affect the priority of any liens
for unpaid State or local governmental unit special assessments or taxes.

22. Adjustable-Rate Feature. Under the Note, the initial stated interest rate of 3.180% which accrues
on the unpaid principal balance ("Initial Interest Rate") is subject to change, as described below. When
the interest rate changes, the new adjusted interest rate will be applied to the total outstanding principal
balance. Each adjustment to the interest rate will be based upon the weekly average yield on United
States Treasury Securities adjusted to a constant maturity of one year ("Index") plus a margin. The Index
is published in the Federal Reserve Bulletin and made available by the United States Treasury
Department in Statistical Release H.15 (519). If the Index is no longer available, Lender will be required
to use any index prescribed by the Department of Housing and Urban Development. Lender will give
Borrower notice of new index.

Lender will perform the calculations described below to determine the new adjusted interest rate. The
interest rate may change on May 1, 2009 and on the first day of each succeeding month. "Change
Date" means each date in which the interest rate could change.

The value of the Index will be determined, using the most recent Index figure available thirty (30) days
before the Change Date ("Current Index"). Before each Change Date, the new interest rate will be
calculated by adding a margin to the Current Index. The sum of the margin plus the Current Index will
be called the "Calculated Intgrest Rate” for each Change Date. The Calculated Interest Rate will be
compared to the interest rate in effect immediately prior to the current Change Date (the "Existing

Interest Rate").
RP.
Page 60f9

HECM First Deed OF Trust

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Case 20-30438-KLP Claim3 Filed 06/19/20 Desc Main Document Page 27 of 33
“858 1 is0969
EXHIBIT A
Exhibit A to the Mortgage made on February 2, 2009, by Rose Clarke Parham ("Borrower") to Ist

Mariner Bank ("Lender"). The Property is located in the county of CHESTERFIELD, state of.
Virginia, described as follows:
\

Description of Property

LEGAL DESCRIPTION ATTACHED HERETO AND MADE A PART HEREOF

Page 9 of9 HECM First Deed Of Trust


Case 20-30438-KLP Claim3 Filed 06/19/20 Desc Main es) Page 19 of 33
. . KBSB | tity 96 j

Record and Return to: oie veme THe EXHIBIT
Norviewd Ave.
ee "Norfolk VA 2355 |
Prepared By: Ist Mariner Bank
3301 Boston Street

Baltimore, MD 21224

ioaste, >

a Co

vO
Tap

[Space Above This Line F
‘Commonwealth of VIRGINIA FHA _ __=
Loan No.
ADJUSTABLE RATE

HOME EQUITY CONVERSION DEED OF TRUST

THIS IS A CREDIT LINE DEED OF TRUST

THIS DEED OF TRUST ("Security Instrument") is made on February 2, 2009. The grantor is Rose
Clarke Parham , whose address is 9100 HOPKINS ROAD, RICHMOND, Virginia 23237
("Borrower"). The trustee is SUPREME TITLE INSURANCE AGENCY, a resident of the
Commonwealth of Virginia, whose full residence or business address is 808 NORVIEW AVENUE,
NORFOLK, VA 23509, trustees (any one of whom may act and who are referred to as "Trustee".
Trustee is a Virginia resident and/or a United States- or Virginia-chartered corporation whose principal
office is located in Virginia. The beneficiary is 1st Mariner Bank, which is organized and existing
under the laws of MARYLAND, and whose address is 3301 Boston Street, Baltimore, MD 21224
("Lender"). Borrower has agreed to repay to Lender amounts which Lender is obligated to advance,
including future advances, under the terms of a Home Equity Conversion Loan Agreement dated the
same date as this Security Instrument ("Loan Agreement”). The agreement to repay is evidenced by
Borrower's Adjustable-Rate Note dated the same date as this Security Instrument ("Note"). This Security
Instrument secures to Lender: (a) the repayment of the debt evidenced by the Note, with interest at a rate
subject to adjustment (interest), and all renewals, extensions and modifications of the Note, up to a
maximum principal amount of One Hundred Ninety Five Thousand Dollars and Zero Cents (U.S.
$195,000.00); (b) the payment of all other sums, with interest, advanced under paragraph 5 to protect
the security of this Security Instrument or otherwise due under the terms of this Security Instrument; and
(c) the performance of Borrower's covenants and agreements under this Security Instrument and the
Note. The full debt, including amounts described in (a), (b), and (c) above, if not due earlier, is due and
payable on April 6, 2084. For this purpose, Borrower irrevocably grants and conveys to Trustee and
‘Trustee's successors and assigns, in trust, with power of sale, the following described property located

in CHESTERFIELD County, VIRGINIA:

See legal description as Exhibit A attached hereto and made a part hereof for all intents and
purposes

which has the address of
9100 HOPKINS ROAD, RICHMOND, Virginia 23237, ("Property Address”)

TO HAVE AND TO HOLD said property unto Trustee and Trustee's successors and assigns, forever,
together with all the improvements now or hereafter erected on the property, and all easements, rights,
appurtenances, and fixtures now or hereafter a part of the property. All replacements and additions shall
also be covered by this Security Instrument. Alll of the foregoing is referred to in this Security
Instrument as the "Property."

PROVIDED, HOWEVER, that if I pay to you the debt described above and all additional advances and
all other sums payable by me to you under this Security Instrument and under the terms of the
Agreement, together with interest thereon, and I perform and discharge all of my other obligations under
the Agreement and Security Instrument as and when required, and you cancel the Agreement and my
Account thereunder, then this Security Instrument and the estate hereby granted shall cease and become
void upon the recordation of an instrument of release or satisfaction

K.P.

Page of HECM Fin Deed OF Trust


Case 20-30438-KLP Claim3 Filed 06/19/20 Desc Main Document
8858 | hk U968

[Space Below This Line For Acknowledgment]

State of VIRGINIA

County of.

T ing instrument was acknowledged before me this Yoblany 22009 (date) by
ark Wiha: (name of person acknowledged).

i of Person Taking Acknowledgment
Zola Lebla

Serial Number, if any

My commission expires the day of,

Page 8 of 9 HECM First Deed Of Trust

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Case 20-30438-KLP Claim3  Filed_06/19/20 Desc Main Document
: SREB Pa B%

shall not be considered a conveyance for purposes of this Paragraph 9. A trust shall not be
considered an occupant or be considered as having a principal residence for purposes of this
Paragraph 9. :

(O Mortgage Not Insured, Borrower agrees that should this Security Instrument and the Note not
be eligible for insurance under the National Housing Act within eight (8) months from the date
hereof, if permitted by applicable law Lender may, at its option, require immediate payment-in-full
of all sums secured by this Security Instrument. A written statement of any authorized agent of the
Secretary dated subsequent to eight (8) months from the date hereof, declining to insure this”
Security Instrument and the Note, shal] be deemed conclusive proof of such ineligibility.
Notwithstanding the foregoing, this option may not be exercised by Lender when the
unavailability of insurance is solely due to Lender's failure to remit a mortgage insurance premium
to the Secretary,

10. No Deficiency Judgments. Borrower shall have no personal liability for payment of the debt
secured by this Security Instrument. Lender may enforce the debt only through sale of the Property.
Lender shall not be permitted to obtain a deficiency judgment against Borrower if the Security
Instrument is foreclosed. If this Security Instrument is assigned to the Secretary upon demand by the
Secretary, Borrower shall not be liable for any difference between the mortgage insurance benefits paid
to Lender and the outstanding indebtedness, including accrued interest, owed by Borrower at the time of
the assignment.

11. Reinstatement. Borrower has a right to be reinstated if Lender has required immediate
payment-in-full. This right applies even after foreclosure proceedings are instituted. To reinstate this
Security Instrument, Borrower shall correct the condition which resulted in the requirement for
immediate payment-in-full. Foreclosure costs and reasonable and customary attomey's fees and
expenses properly associated with the foreclosure proceeding shall be added to the principal balance.
Upon reinstatement by Borrower, this Security Instrument and the obligations that it secures shall
remain in effect as if Lender had not required immediate payment-in-full. However, Lender is not
required to permit reinstatement if: (i) Lender has accepted reinstatement after the commencement of
foreclosure proceedings within two years immediately preceding the commencement of a current
foreclosure proceeding, (ii) reinstatement will preclude foreclosure on different grounds in the future, or
(iii) reinstatement will adversely affect the priority of the Security Instrument.

12. Lien Status.
(8) Modification.

Borrower agrees to extend this Security Instrument in accordance with this Paragraph 12(a).
If Lender determines that the original lien status of the Security Instrument is jeopardized
under state law (including but not limited to situations where the amount secured by the
Security Instrument equals or exceeds the maximum principal amount stated or the
maximum period under which loan advances retain the same lien priority initially granted to
loan advances has expired) and state law permits the original lien status to be maintained for
future loan advances through the execution and recordation of one or more documents, then
Lender shall obtain title evidence at Borrower's expense. If the title evidence indicates that
the property is not encumbered by any liens (except this Security Instrument, the Second
Security Instrument described in Paragraph 13(a) and any subordinate liens that the Lender
determines will also be subordinate to any future loan advances), Lender shall request the
Borrower to execute any documents necessary to protect the lien status of future loan
advances. Borrower agrees to execute such documents. If state law does not permit the
original lien status to be extended to future loan advances, Borrower will be deemed to have
failed to have performed an obligation under this Security Instrument.

(b) Tax Deferral Programs.

Borrower shall not participate in a real estate tax deferral program, if any liens created by the
tax deferral are not subordinate to this Security Instrument.

(©) Prior Liens.

Borrower shall promptly discharge any lien which has priority over this Security Instrument
unless Borrower: (a) agrees in writing to the payment of the obligation secured by the lien in
‘ manner acceptable to Lender; (b) contests in good faith the lien by, or defends against
enforcement of the lien in, legal proceedings which in the Lender's opinion operate to
prevent the enforcement of the lien or forfeiture of any part of the Property; or (c) secures
from the holder of the lien an agreement satisfactory to Lender subordinating the lien to all
amounts secured by this Security Instrument. If Lender determines that any part of the
Property is subject to a lien which may attain priority over this Security Instrument, Lender
may give Borrower a notice identifying the lien. Borrower shall satisfy the lien or take one or
more of the actions set forth above within 10 days of the giving of notice.

Re

Page dot 9 HEOM Firs Deed Of Trust,

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wWKBS BI FEI S

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, including payment
of taxes, hazard insurance and other items mentioned in Paragraph 2.

To protect Lender's security in the Property, Lender shall advance and charge to Borrower all amounts
due fo the Secretary for the Mortgage Insurance Premium as defined in the Loan Agreement as well as
all sums due to the loan servicer for servicing activities as defined in the Loan Agreement. Any amounts
disbursed by Lender under this Paragraph shall become an additional debt of Borrower as provided for
in the Loan Agreement and shall be secured by this Security Instrument. .

6. Inspection, Lender or its agent may enter on, inspect or make appraisals of the Property in a
reasonable manner and at reasonable times provided that Lender shall give the Borrower notice prior to
any inspection or appraisal specifying a purpose for the inspection or appraisal which must be related to
Lender's interest in 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 without notice to
the Borrower.

7. Condemnation. The proceeds of any award or claim for damages, direct or consequential, in
connection with any condemnation, or other taking of any part of the Property, or for conveyance in
place of condemnation shall be paid to Lender. The proceeds shall be applied first to the reduction of
any indebtedness under a Second Note and Second Security Instrument held by the Secretary on the
Property, and then to the reduction of the indebtedness under the Note and this Security Instrument. 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 entitled thereto.

8, Fees, Lender may collect fees and charges authorized by the Secretary.
9. Grounds for Acceleration of Debt.

(a) Due and Payable, Lender may require immediate payment-in-full of all sums secured by this
Security Instrument if:

(i) A Borrower dies and the Property is not the principal residence of at least one surviving
Borrower; or

Gi) All of a Borrower's title in the Property (or his or her beneficial interest in a trust owning
all or part of the Property) is sold or otherwise transferred and no other Borrower retains title
to the Property in fee simple or retains a leasehold under a lease for not less than 99 years
which is renewable or a lease having a remaining period of not less than 50 years beyond the
date of the 100th birthday of the youngest Borrower or retains a life estate (or retaining a
beneficial interest in a trust with such an interest in the Property).

(b) Due and Payable with Secretary Approval. Lender may require immediate payment-in-full
of all sums secured by this Security Instrument, upon approval of the Secretary, if:

(i) The Property ceases to be the principal residence of a Borrower for reasons other than
death and the Property is not the principal residence of at least one other Borrower; or

(ii) For a period of longer than 12 consecutive months, a Borrower fails to occupy the
Property because of physical or mental illness and the Property is not the principal residence
of at least one other Borrower; or

(iii) An obligation of the Borrower under this Security Instrument is not performed.

(©) Notice to Lender. Borrower shall notify Lender whenever any of the events listed in this
Paragraph 9 (a)(ii) and (b) occur.

(@) Notice to Secretary and Borrower. Lender shall notify the Secretary and Borrower whenever
the loan becomes due and payable under Paragraph 9 (a)(ii) and (b). Lender shall not have the right
to commence foreclosure until Borrower has had 30 days after notice to either:
(i) Correct the matter which resulted in the Security Instrument coming due and payable; or
(ii) Pay the balance in full; or

(iii) Sell the Property for the lesser of the balance or 95% of the appraised value and apply
the net proceeds of the sale toward the balance; or

(iv) Provide the Lender with a deed-in-lieu of foreclosure.

‘
(©) Trusts. Conveyance of a Borrower's interest in the Property to a trust which meets the
requirements of the Secretary, or conveyance of a trust's interests in the Property to a Borrower,

q
RP sae ss

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KB98 1 FLV 962

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

UNIFORM COVENANTS. Borrower and Lender covenant and agree as follows:

1. Payment of Principal and Interest. Borrower shall pay when due the principal of, and interest on,
the debt evidenced by the Note.

2, Payment of Property Charges. Borrower shall pay all property charges consisting of taxes, ground
rents, flood and hazard insurance premiums, and special assessments in a timely manner, and shall
provide evidence of payment to Lender, unless Lender pays property charges by withholding funds from
monthly payments due to the Borrower or by charging such payments to a line of credit as provided for
in the Loan Agreement.

3. Fire, Flood and Other Hazard Insurance. Borrower shall insure all improvements on the Property,
whether now in existence or subsequently erected, against any hazards, casualties, and contingencies,
including fire. This insurance shall be maintained in the amounts, to the extent and for the periods
Tequired by Lender or the Secretary of Housing and Urban Development ("Secretary"). Borrower shall
also insure all improvements on the Property, whether now in existence or subsequently erected, against
loss by floods to the extent required by the Secretary. All 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.

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. Each insurance company concerned is hereby authorized and
directed to make payment for such loss to Lender instead of to Borrower and Lender jointly. Insurance
proceeds shall be applied to restoration or repair of the damaged Property, if the restoration or repair is
economically feasible and Lender's security is not lessened. If the restoration or repair is not
economically feasible or Lender's security would be lessened, the insurance proceeds shall be applied
first to the reduction of any indebtedness under a Second Note and Second Security Instrument held by
the Secretary on the Property and then to the reduction of the indebtedness under the Note and this
Security Instrument, Any excess insurance proceeds over an amount required to pay all outstanding
indebtedness under the Note and this Security Instrument shall be paid to the entity legally entitled
thereto.

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.

4. Occupancy, Preservation, Maintenance and Protection of the Property; Borrower's Loan
Application; Leaseholds, Borrower shall occupy, establish, and use the Property as Borrower's
principal residence after the execution of this Security Instrument and Borrower (or at least one
Borrower, if initially more than one person are Borrowers) shall continue to occupy the Property as
Borrower's principal residence for the term of the Security Instrument. "Principal residence" shall have
the same meaning as in the Loan Agreement.

Borrower shall not commit waste or destroy, damage or substantially change the Property or allow the
Property to deteriorate, reasonable wear and tear excepted. Borrower shall also be in default if
Borrower, during the loan application process, gave materially false or inaccurate information or
statements to Lender (or failed to provide Lender with any material information) in connection with the
loan evidenced by the Note, including, but not limited to, representations concerning Borrower's
occupancy of the Property as a principal residence. If this Security Instrument is on a leasehold,
Borrower shall comply with the provisions of the lease. If Borrower acquires fee title to the Property, the
leasehold and fee title shall not be merged unless Lender agrees to the merger in writing.

5. 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 obligations on time directly to the entity which is 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. Borrower shall promptly discharge any
lien which has priority over this Security Instrument in the manner provided in Paragraph 12(c).

If Borrower fails to make thesg payments or the property charges 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 significantly affect Lenders rights in the Property (such as a proceeding in

4 . Page2of9 ‘HEC First Deed Of Trust

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