Model Mortgage Form

MODEL MORTGAGE FORM

(HOME EQUITY CONVERSION)

[See Instructions Attached]

FHA Case No.

__________________[Space Above This Line For Recording Data]_______________

MORTGAGE

THIS MORTGAGE ("Security Instrument") is given on

, 19 . The mortgagor is , whose

address is ("Borrower"). This Security Instrument

is given to , which is organized and existing

under the laws of , and whose address is

("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 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, and all

renewals, extensions and modifications of the Note, up to a maximum

principal amount of Dollars (U.S. $ ); (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. For this

purpose, Borrower does hereby mortgage, warrant, grant and convey to

Lender, with power of sale, the following described property located in

County, Michigan:

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, rights, 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 seised of the estate

hereby conveyed and has the right to mortgage, 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 required 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 these 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 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, 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 to 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

(ii) 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

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

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.

(c) Notice to Lender. Borrower shall notify Lender

whenever any of the events listed in this Paragraph 9

(a)(ii) and (b) occur.

(d) 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.

(e) 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, 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.

(f) Mortgage Not Insured. [Optional] Borrower agrees that

should this Security Instrument and the Note not be eligible

for insurance under the National Housing Act within /1 from

the date hereof, 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 /1 from the

date hereof, declining to insure this Security Instrument

and the Note, shall 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 attorney'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.

(a)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

____________________________

1/ Lenders are authorized, but not required, to add Paragraph 9(f) to the

first security instrument. If used, a period may be inserted in the two

blanks expressed either in number of days or months, which is not shorter

than 60 days and not longer than 8 months.

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.

(c)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 a 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 more of the actions set forth above within 10

days of the giving of notice.

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(i)(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.

(c) Effect on Borrower. Where there is no assignment or

reimbursement as described in (b)(i) 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.

(d) 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 the Security Instrument.

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

follows:

19. Assignment of Rents. [Use this language unless prohibited by

state law.] 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 an assignment for additional security only.

If Lender gives notice of breach to Borrower: (a) all rents received

by Borrower shall be held by 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 or 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. [For illustration only. Needs state

adaptation as provided in the instructions attached.] If Lender requires

immediate payment in full under Paragraph 9, Lender may invoke the power of

sale and any other remedies provided in this Paragraph 20, including, but

not limited to, reasonable attorney's fees and costs of title evidence.

If Lender invokes the power of sale, Lender shall give notice of sale

to Borrower in the manner provided in Paragraph 16. Lender shall publish

and post the notice of sale, and the Property shall be sold in the manner

prescribed by applicable law. Lender or its designee may purchase the

Property at any sale. The proceeds of the sale shall be applied in the

following order: (a) to all expenses of the sale, including, but not

limited to, reasonable attorney's fees; (b) to all sums secured by this

Security Instrument, and (c) any excess to the person or persons legally

entitled to it.

[Add any state-specific provisions in accordance with the instructions

attached and HUD Handbook 4165.1 REV-1, Chapter 4]

[Number as final paragraph.] 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)].

[ ] Condominium Rider [ ] Planned Unit Development Rider

[ ] Shared Appreciation Rider [ ] Other [Specify]

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.

Witnesses:

__________________________ ___________________________ (SEAL)

Borrower

__________________________ ___________________________ (SEAL)

Borrower

__________________[Space Below This Line For Acknowledgement]______________

Instructions for Model Mortgage Form (Home Equity Conversion)

HUD requires that a security instrument follow the form and content of the

approved FNMA/FHLMC security instrument for the jurisdiction, except where

HUD has determined that differences are needed to reflect HUD policy and

practice. The following explains those differences. Additional

instructions are found in Chapter 4, HUD Handbook 4165.1 and Chapter 6, HUD

Handbook 4235.1.

Language Preceding Uniform Covenants

Use FNMA/FHLMC language but:

a.Add a box for the FHA Case No. as shown on the Model Form.

b. For a Mortgage, delete the language beginning with "THIS MORTGAGE"

or "THIS DEED OF TRUST" through "covenants and agreements under this

Security Instrument and Note." Substitute the language shown on the

Model Form. The phrase "up to a maximum principal amount of Dollars

(U.S. $ )" should be omitted in jurisdictions where there is no

legal requirement to state the maximum principal amount in a mortgage

or deed of trust. If the phrase is used, the blank should be

completed with an amount equal to or greater than 150% of the maximum

claim amount.

c. For a Deed of Trust, follow the instructions in "b" above, except

that the first three sentences of the Model Form must be further

revised to read as follows:

This DEED OF TRUST ("Security Instrument") is made on ,

19 . The grantor [or trustor] is ("Borrower").

The trustee is ("Trustee"). The beneficiary is ,

which is organized and existing under the laws of , and

whose address is ("Lender").

d. For Colorado deeds of trust, Georgia security deeds and Louisiana

mortgages, the FNMA/FHLMC forms should be consulted for guidance

regarding additional adaptation of the initial language of the

Security Instrument, including language describing a note for

Louisiana.

e. For Maine and New York in which FNMA and FHLMC use "plain English"

forms, the format and language should be based on FNMA/FHLMC forms for

other states provided that the language is in conformity with

applicable law.

The Model Form uses the FNMA/FHLMC language for Michigan as an example.

The form may include variations to the standard language that have been

approved by FNMA and/or FHLMC.

Uniform Covenants

The form should designate the paragraphs preceding Paragraph 20 on

foreclosure procedures as "Uniform Covenants". The text of these

paragraphs must be used as presented in the Model Form without any change.

FNMA/FHLMC language may not be substituted. If change is needed to make

requirements of state or local law or practice, written approval from HUD

is needed before the change is made.

Non-Uniform Covenants

The form should designate the paragraphs beginning with Paragraph 19 on

assignment of rents as "Non-Uniform Covenants".

a. The FNMA/FHLMC paragraph on foreclosure procedures will need

adaptation to reflect HUD policy. The Model Form contains an

adaptation of the FNMA/FHLMC language for Michigan as an example.

Following the phrase "If Lender requires immediate payment in full

under Paragraph 9" as shown in Paragraph 20 of the Model Form, the

mortgage should use the foreclosure procedures paragraph of the

current approved FNMA/FHLMC form (including language regarding payment

of costs such as attorney's fees) as a guide with any necessary

adaptation to conform to these instructions. Language in the

FNMA/FHLMC paragraph regarding notice and acceleration should be

omitted. For Maine and New York, Lenders should use foreclosure

language based on these instructions and other FNMA/FHLMC forms that

are not "plain English" forms provided that the language will

authorize foreclosure in conformity with applicable law. The mortgage

must include the Lender's right to a public sale of the Property,

including a power of sale if legally permissible in the jurisdiction

in which the property is located even if mortgages are usually

foreclosed through a judicial proceeding.

b. The paragraphs following Paragraph 20 should contain provisions

required to adapt the mortgage to the laws and practices of the

particular jurisdiction in which the Property is located. The text of

these paragraphs should be the same as the FNMA/FHLMC non-uniform

covenants for the jurisdiction in which the Property is located.

Changes to the FNMA/FHLMC paragraphs and additional material may be

included if needed to conform to requirements of state law or

practice. The paragraph entitled "Riders to this Security Instrument"

should be used as shown in the Model Form instead of as shown in the

FNMA/FHLMC forms.

c. Any special language or notices required by applicable law should

appear following the non-uniform covenants using the FNMA/FHLMC form

as a guide.

Signatures, etc.

Use the FNMA/FHLMC format at the end of the mortgage except that:

a. Witness lines may be omitted if state and local law does not

require witnesses for mortgages.

b. HUD does not require the Borrower's social security number to

appear on the mortgage.