7. Preservation, Maintenance and Protection of the Property; Inspections.
Borrower shall not destroy, damage or impair the Property, allow the
Property to deteriorate or commit waste on the Property. Whether or not
Borrower is residing in the Property, Borrower shall maintain the Property
in order to prevent the Property from deteriorating or decreasing in value
due to its condition. Unless it is determined pursuant to Section 5 that
repair or restoration is not economically feasible, Borrower shall promptly
repair the Property if damaged to avoid further deterioration or damage. If
insurance or condemnation proceeds are paid in connection with damage to, or
the taking of, the Property, Borrower shall be responsible for repairing or
restoring the Property only if Lender has released proceeds for such
purposes. Lender may disburse proceeds for the repairs and restoration in a
single payment or in a series of progress payments as the work is completed.
If the insurance or condemnation proceeds are not sufficient to repair or
restore the Property, Borrower is not relieved of Borrower's obligation for
the completion of such repair or restoration. Lender or its agent may make
reasonable entries upon and inspections of the Property. If it has
reasonable cause, Lender may inspect the interior of the improvements on the
Property. Lender shall give Borrower notice at the time of or prior to such
an interior inspection specifying such reasonable cause.
8. Borrower's Loan Application.
Borrower shall be in default if, during the Loan application process,
Borrower or any persons or entities acting at the direction of Borrower or
with Borrower's knowledge or consent gave materially false, misleading, or
inaccurate information or statements to Lender (or failed to provide Lender
with material information) in connection with the Loan. Material
representations include, but are not limited to, representations concerning
Borrower's occupancy of the Property as Borrower's principal residence.
9. Protection of Lender's Interest in the Property and Rights Under this
Security Instrument.
If (a) Borrower fails to perform the covenants and agreements contained in
this Security Instrument, (b) there is a legal
proceeding that
might significantly affect Lender's interest in the Property and/or rights
under this Security Instrument (such as a proceeding in bankruptcy, probate,
for condemnation or forfeiture, for enforcement of a lien which may attain
priority over this Security Instrument or to enforce laws or regulations),
or (c) Borrower has abandoned the Property, then Lender may do and pay for
whatever is reasonable or appropriate to protect Lender's interest in the
Property and rights under this Security Instrument, including protecting
and/or assessing the value of the Property, and securing and/or repairing
the Property. Lender's actions can include, but are not limited to: (a)
paying any sums secured by a lien which has priority over this Security
Instrument; (b) appearing in court; and (c) paying reasonable attorneys'
fees to protect its interest in the Property and/or rights under this
Security Instrument, including its secured position in a bankruptcy
proceeding. Securing the Property includes, but is not limited to, entering
the Property to make repairs, change locks, replace or board up doors and
windows, drain water from pipes, eliminate building or other code violations
or dangerous conditions, and have utilities turned on or off. Although
Lender may take action under this Section 9, Lender does not have to do so
and is not under any duty or obligation to do so. It is agreed that Lender
incurs no liability for not taking any or all actions authorized under this
Section 9.
Any amounts
disbursed by Lender under this Section 9 shall become additional debt of
Borrower secured by this Security Instrument. These amounts shall bear
interest at the Note rate from the date of disbursement and shall be
payable, with such interest, upon notice from Lender to Borrower requesting
payment.
If this Security
Instrument is on a leasehold, Borrower shall comply with all the provisions
of the lease. Borrower shall not surrender the leasehold estate and
interests herein conveyed or terminate or cancelthe ground lease. Borrower
shall not, without the express written consent of Lender, alter or amend the
ground lease. If Borrower acquires fee title to the Property, the leasehold
and the fee title shall not merge unless Lender agrees to the merger in
writing.
10. Mortgage
Insurance.
If Lender required
Mortgage Insurance as a condition of making the Loan, Borrower shall pay the
premiums required to maintain the Mortgage Insurance in effect. If, for any
reason, the Mortgage Insurance coverage required by Lender ceases to be
available from the mortgage insurer that previously provided such insurance
and Borrower was required to make separately designated payments toward the
premiums for Mortgage Insurance, Borrower shall pay the premiums required to
obtain coverage substantially equivalent to the Mortgage Insurance
previously in effect, at a cost substantially equivalent to the cost to
Borrower of the Mortgage Insurance previously in effect, from an alternate
mortgage insurer selected by Lender. If substantially equivalent Mortgage
Insurance coverage is not available, Borrower shall continue to pay to
Lender the amount of the separately designated payments that were due when
the insurance coverage ceased to be in effect. Lender will accept, use and
retain these payments as a non-refundable loss reserve in lieu of Mortgage
Insurance. Such loss reserve shall be non-refundable, notwithstanding the
fact that the Loan is ultimately paid in full, and Lender shall not be
required to pay Borrower any interest or earnings on such loss reserve.
Lender can no longer require loss reserve payments if Mortgage Insurance
coverage (in the amount and for the period that Lender requires) provided by
an insurer selected by Lender again becomes available, is obtained, and
Lender requires separately designated payments toward the premiums for
Mortgage Insurance. If Lender required Mortgage Insurance as a condition of
making the Loan and Borrower was required to make separately designated
payments toward the premiums for Mortgage Insurance, Borrower shall pay the
premiums required to maintain Mortgage Insurance in effect, or to provide a
non-refundable loss reserve, until Lender's requirement for Mortgage
Insurance ends in accordance with any written agreement between Borrower and
Lender providing for such termination or until termination is required by
Applicable Law. Nothing in this Section 10 affects Borrower's obligation to
pay interest at the rate provided in the Note.
Mortgage Insurance
reimburses Lender (or any entity that purchases the Note) for certain losses
it may incur if Borrower does not repay the Loan as agreed. Borrower is not
a party to the Mortgage Insurance.
Mortgage insurers
evaluate their total risk on all such insurance in force from time to time,
and may enter into agreements with other parties that share or modify their
risk, or reduce losses. These agreements are on terms and conditions that
are satisfactory to the mortgage insurer and the other party (or parties) to
these agreements. These agreements may require the mortgage insurer to make
payments using any source of funds that the mortgage insurer may have
available (which may include funds obtained from Mortgage Insurance
premiums).
As a result of
these agreements, Lender, any purchaser of the Note, another insurer, any
reinsurer, any other entity, or any affiliate of any of the foregoing, may
receive (directly or indirectly) amounts that derive from (or might be
characterized as) a portion of Borrower's payments for Mortgage Insurance,
in exchange for sharing or modifying the mortgage
insurer's risk, or reducing losses. If such agreement provides that an
affiliate of Lender takes a share of the insurer's risk in exchange for a
share of the premiums paid to the insurer, the arrangement is often termed
"captive reinsurance." Further:
(a) Any such agreements will not affect the amounts that Borrower has agreed
to pay for Mortgage Insurance, or any other terms of the Loan. Such
agreements will not increase the amount Borrower will owe for Mortgage
Insurance, and they will not entitle Borrower to any refund.
(b) Any such agreements will not affect the rights Borrower has - if any -
with respect to the Mortgage Insurance under the Homeowners Protection Act
of 1998 or any other law. These rights may include the right to receive
certain disclosures, to request and obtain cancellation of the Mortgage
Insurance, to have the Mortgage Insurance terminated automatically,
and/or to receive a refund of any Mortgage Insurance premiums that were unearned at
the time of such cancellation or termination.
11. Assignment
of Miscellaneous Proceeds; Forfeiture.
All Miscellaneous
Proceeds are hereby assigned to and shall be paid to Lender.
If the Property is
damaged, such Miscellaneous Proceeds shall be applied to restoration or
repair of the Property, if the restoration or repair is economically
feasible and Lender's security is not lessened. During such repair and
restoration period, Lender shall have the right to hold such Miscellaneous
Proceeds until Lender has had an opportunity to inspect such Property to
ensure the work has been completed to Lender's satisfaction, provided that
such inspection shall be undertaken promptly. Lender may pay for the repairs
and restoration in a single disbursement or in a series of progress payments
as the work is completed. Unless an agreement is made in writing or
Applicable Law requires interest to be paid on such Miscellaneous Proceeds,
Lender shall not be required to pay Borrower any interest or earnings on
such Miscellaneous Proceeds. If the restoration or repair is not
economically feasible or Lender's security would be lessened, the
Miscellaneous Proceeds shall be applied to the sums secured by this Security
Instrument, whether or not then due, with the excess, if any, paid to
Borrower. Such Miscellaneous Proceeds shall be applied in the order provided
for in Section 2.
In the event of a
total taking, destruction, or loss in value of the Property, the
Miscellaneous Proceeds shall be applied to the sums secured by this Security
Instrument, whether or not then due, with the excess, if any, paid to
Borrower.
In the event of a
partial taking, destruction, or loss in value of the Property in which the
fair market value of the Property immediately before the partial taking,
destruction, or loss in value is equal to or greater than the amount of the
sums secured by this Security Instrument immediately before the partial
taking, destruction, or loss in value, unless Borrower and Lender otherwise
agree in writing, the sums secured by this Security Instrument shall be
reduced by the amount of the Miscellaneous Proceeds multiplied by the
following fraction: (a) the total amount of the sums secured immediately
before the partial taking, destruction, or loss in value divided by (b) the
fair market value of the Property immediately before the partial taking,
destruction, or loss in value. Any balance shall be paid to Borrower.
In the event of a
partial taking, destruction, or loss in value of the Property in which the
fair market value of the Property immediately before the partial taking,
destruction, or loss in value is less than the amount of the sums secured
immediately before the partial taking, destruction, or loss in value, unless
Borrower and Lender otherwise agree in writing, the Miscellaneous Proceeds
shall be applied to the sums secured by this Security Instrument whether or
not the sums are then due.
If the Property is
abandoned by Borrower, or if, after notice by Lender to Borrower that the
Opposing Party (as defined in the next sentence) offers to make an award to
settle a claim for damages, Borrower fails to respond to Lender within 30
days after the date the notice is given, Lender is authorized to collect and
apply the Miscellaneous Proceeds either to restoration or repair of the
Property or to the sums secured by this Security Instrument, whether or not
then due. "Opposing Party" means the third party that owes Borrower
Miscellaneous Proceeds or the party against whom Borrower has a right of
action in regard to Miscellaneous Proceeds.
Borrower shall be
in default if any action or proceeding, whether civil or criminal, is begun
that, in Lender's judgment, could result in forfeiture of the Property or
other material impairment of Lender's interest in the Property or rights
under this Security Instrument. Borrower can cure such a default and, if
acceleration has occurred, reinstate as provided in Section 19, by causing
the action or proceeding to be dismissed with a ruling that, in Lender's
judgment, precludes forfeiture of the Property or other material impairment
of Lender's interest in the Property or rights under this
Security Instrument. The proceeds of any award or claim for damages that
are attributable to the impairment of Lender's interest in the Property are
hereby assigned and shall be paid to Lender.
All Miscellaneous
Proceeds that are not applied to restoration or repair of the Property shall
be applied in the order provided for in Section 2.
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