currency. However, if any check or other instrument received by Lender as payment under the Note or this <br />Security Instrument is returned to Lender unpaid, Lender may require that any or all subsequent payments <br />due under the Note and this Security Instrument be made in one or more of the following forms, as <br />selected by Lender: (a) cash; (b) money order; (c) certified check, bank check, treasurer's check or <br />cashier's check, provided any such check is drawn upon an institution whose deposits are insured by a <br />federal agency, instrumentality, or entity; or (d) Electronic Funds Transfer. <br />Payments are deemed received by Lender when received at the location designated in the Note or at <br />such other location as may be designated by Lender in accordance with the notice provisions in Section 15. <br />Lender may return any payment or partial payment if the payment or partial payments are insufficient to <br />bring the Loan current. Lender may accept any payment or partial payment insufficient to bring the Loan <br />current, without waiver of any rights hereunder or prejudice to its rights to refuse such payment or partial <br />payments in the future, but Lender is not obligated to apply such payments at the time such payments are <br />accepted. If each Periodic Payment is applied as of its scheduled due date, then Lender need not pay <br />interest on unapplied funds. Lender may hold such unapplied funds until Borrower makes payment to bring <br />the Loan current. If Borrower does not do so within a reasonable period of time, Lender shall either apply <br />such funds or return them to Borrower. If not applied earlier, such funds will be applied to the outstanding <br />principal balance under the Note immediately prior to foreclosure. No offset or claim which Borrower <br />might have now or in the future against Lender shall relieve Borrower from making payments due under <br />the Note and this Security Instrument or performing the covenants and agreements secured by this Security <br />Instrument. <br />2. Application of Payments or Proceeds. Except as otherwise described in this Section 2, all <br />payments accepted and applied by Lender shall be applied in the following order of priority: (a) interest <br />due under the Note; (b) principal due under the Note; (c) amounts due under Section 3. Such payments <br />shall be applied to each Periodic Payment in the order in which it became due. Any remaining amounts <br />shall be applied first to late charges, second to any other amounts due under this Security Instrument, and <br />then to reduce the principal balance of the Note. <br />If Lender receives a payment from Borrower for a delinquent Periodic Payment which includes a <br />sufficient amount to pay any late charge due, the payment may be applied to the delinquent payment and <br />the late charge. If more than one Periodic Payment is outstanding, Lender may apply any payment received <br />from Borrower to the repayment of the Periodic Payments if, and to the extent that, each payment can be <br />paid in full. To the extent that any excess exists after the payment is applied to the full payment of one or <br />more Periodic Payments, such excess may be applied to any late charges due. Voluntary prepayments shall <br />be applied first to any prepayment charges and then as described in the Note. <br />Any application of payments, insurance proceeds, or Miscellaneous Proceeds to principal due under <br />the Note shall not extend or postpone the due date, or change the amount, of the Periodic Payments. <br />3. Funds for Escrow Items. Borrower shall pay to Lender on the day Periodic Payments are due <br />under the Note, until the Note is paid in full., a sum (the "Funds") to provide for payment of amounts due <br />for: (a) taxes and assessments and other items which can attain priority over this Security Instrument as a <br />lien or encumbrance on the Property; (b) leasehold payments or ground rents on the Property, if any; (c) <br />premiums for any and all insurance required by Lender under Section 5; and (d) Mortgage Insurance <br />premiums, if any, or any sums payable by Borrower to Lender in lieu of the payment of Mortgage <br />Insurance premiums in accordance with the provisions of Section 10. These items are called "Escrow <br />Items." At origination or at any time during the term of the Loan, Lender may require that Community <br />Association Dues, Fees, and Assessments, if any, be escrowed by Borrower, and such dues, fees and <br />assessments shall be an Escrow Item. Borrower shall promptly furnish to Lender all notices of amounts to <br />be paid under this Section. Borrower shall pay Lender the Funds for Escrow Items unless Lender waives <br />Borrower's obligation to pay the Funds for any or all Escrow Items. Lender may waive Borrower's <br />obligation to pay to Lender Funds for any or all Escrow Items at any time. Any such waiver may only be <br />-6(OR) wio4LO1 Pagcaof 15 form 3038 1/01 <br />