94000M Security Instrument_modified 4-30-24

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OMB Approval No. 2502-0598
(Exp. //)
Public Reporting Burden for this collection of information is estimated to average .75 hours per response, including the time for
reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing
the collection of information. Response to this request for information is required in order to receive the benefits to be derived. This
agency may not collect this information, and you are not required to complete this form unless it displays a currently valid OMB
control number.
Warning: Any person who knowingly presents a false, fictitious, or fraudulent statement or claim in a matter within the jurisdiction of
the U.S. Department of Housing and Urban Development is subject to criminal penalties, civil liability, and administrative sanctions.

Recording requested by:
_______________________________________
_______________________________________
_______________________________________
_______________________________________
After recording return to:
_______________________________________
_______________________________________
_______________________________________
_______________________________________

MULTIFAMILY [LEASEHOLD] (MORTGAGE,
DEED OF TRUST, DEED TO SECURE DEBT,
OR OTHER DESIGNATION AS APPROPRIATE IN JURISDICTION)
ASSIGNMENT OF LEASES AND RENTS
AND SECURITY AGREEMENT
(STATE)

HUD Project Number:
Project Name:

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MULTIFAMILY [LEASEHOLD] (MORTGAGE,
DEED OF TRUST, DEED TO SECURE DEBT,
OR OTHER DESIGNATION AS APPROPRIATE IN JURISDICTION)
ASSIGNMENT OF LEASES AND RENTS AND
SECURITY AGREEMENT

THIS MULTIFAMILY [LEASEHOLD] (MORTGAGE, DEED OF TRUST, DEED
TO SECURE DEBT, OR OTHER DESIGNATION AS APPROPRIATE IN
JURISDICTION), ASSIGNMENT OF LEASES AND RENTS AND SECURITY
AGREEMENT, WHICH, FOR AS LONG AS THE LOAN IS INSURED OR HELD BY
HUD, SHALL BE DEEMED TO BE THE MORTGAGE AS DEFINED BY PROGRAM
OBLIGATIONS (“Security Instrument”), is made as of this_____ day
of____________, ______, [among][between]
_____________________________________________________________,
a______________________________ organized and existing under the laws of
__________________________________, whose address
is__________________________________________________________________
____________________________________________________, as grantor [, trustor,]
and borrower (“Borrower”), and
____________________________________________,
[[a____________________________________ organized and existing under the laws
of ____________________________________,] OR [a natural person,] whose address
is_____________________________________________________________
_____________________, as trustee (“Trustee”), for the benefit of
_________________________________,]
a____________________________________ organized and existing under the laws of
____________________________________, whose address
is_______________________________________________________, [as beneficiary
and] as Lender (“Lender”). [DELETE INAPPLICABLE LANGUAGE].
[Borrower, in consideration of the Indebtedness and the trust created by this
Security Instrument, irrevocably grants, conveys and assigns to Trustee and Trustee's
successors and assigns, in trust, with power of sale, the Mortgaged Property, including
the Land located in _____________________ County, State of ___________ and
described in Exhibit A attached to this Security Instrument, to have and to hold the
Mortgaged Property unto Trustee and Trustee's successors and assigns.
ALTERNATIVE A DEED OF TRUST GRANTING CLAUSE; DELETE IF NOT
APPLICABLE.]
[Borrower, in consideration of the Indebtedness and the security interest created
by this Security Instrument, irrevocably mortgages, grants, conveys and assigns to
Lender and Lender’s successors and assigns, with power of sale, the Mortgaged

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Property, including the Land located in _____________County, State of ___________
and described in Exhibit A attached to this Security Instrument, to have and to hold the
Mortgaged Property unto Lender and Lender’s successors and assigns.
ALTERNATIVE B MORTGAGE GRANTING CLAUSE; DELETE IF NOT
APPLICABLE.]
[Borrower, in consideration of the Indebtedness and the security interest created
by this Security Instrument, irrevocably grants, conveys and assigns to Lender and
Lender’s successors and assigns, with power of sale, the Mortgaged Property, including
the Land located in _____________County, State of Georgia and described in Exhibit A
attached to this Security Instrument, to have and to hold the Mortgaged Property unto
Lender and Lender’s successors and assigns. As used in this Security Instrument, the
term “Mortgaged Property” is synonymous with the term “Secured Property,” and the
term “lien” is synonymous with the term “security interest and title.” ALTERNATIVE C
DEED TO SECURE DEBT – GEORGIA ONLY – GRANTING CLAUSE; DELETE IF
NOT APPLICABLE.]
THIS SECURITY INSTRUMENT IS EXECUTED TO SECURE TO LENDER the
repayment of the Indebtedness evidenced by Borrower's Note payable to Lender dated
as of the date of this Security Instrument, and maturing on _______________,
, in
the principal amount of
$
(“Loan”), and all renewals, extensions and modifications of the
Indebtedness, and the performance of the covenants and agreements of Borrower
contained in this Security Instrument and the Note.
Borrower represents and warrants that Borrower is lawfully seized of the
Mortgaged Property and has the right, power and authority to mortgage, grant, convey
and assign the Mortgaged Property, and that the Mortgaged Property is unencumbered
except for easements and restrictions listed in a schedule of exceptions to coverage in
any title insurance policy issued to Lender contemporaneously with the execution and
recordation of this Security Instrument and insuring Lender's interest in the Mortgaged
Property. Borrower covenants that Borrower shall warrant and defend generally such
title to the Mortgaged Property against all claims and demands, subject to said
easements and restrictions.
Covenants. Borrower and Lender covenant and agree as follows:
1.
DEFINITIONS. The definition of any capitalized term or word used herein
can be found in this Security Instrument, and then if not found in this Security
Instrument, then found in the Regulatory Agreement between Borrower and HUD,
and/or in the Note. The following terms, when used in this Security Instrument
(including when used in the above recitals), shall have the following meanings:
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(a)
“Borrower” means all entities identified as “Borrower” in the first
paragraph of this Security Instrument, together with any successors and assigns (jointly
and severally). Borrower shall include any entity taking title to the Mortgaged Property
whether or not such entity assumes the Note. Whenever the term “Borrower” is used
herein, the same shall be deemed to include the obligor of the debt secured by the
Security Instrument, and so long as the Note is insured or held by HUD shall also be
deemed to be the mortgagor as defined by Program Obligations.
(b)
“Building Loan Agreement” means the HUD-approved form of the
agreement between Borrower and Lender setting forth the terms and conditions for a
construction loan.
(c)

“Business Day” is defined in Section 31.

(d)

“Claim” is defined in Section 48(m).

(e)
“Collateral Agreement” means any separate agreement between
Borrower and Lender for the purpose of establishing replacement reserves for the
Mortgaged Property, establishing an account to assure the completion of repairs or
Improvements specified in that agreement, or any other agreement or agreements
between Borrower and Lender which provide for the establishment of any other fund,
reserve or account including but not limited to those reserves and escrows required by
HUD.
(f)

“Contract of Insurance” is defined in 24 C.F.R. Part 207, Subpart B.

(g)

“Environmental Inspections” is defined in Section 48(h).

(h)
“Event of Default” means the occurrence of any event listed in
Section 22.
(i)
“Fixtures” means all property or goods that become so related or
attached to the Land or the Improvements that an interest arises in them under real
property law, whether acquired now or in the future, excluding all tenant owned goods
and property, and including but not limited to: machinery, equipment, engines, boilers,
incinerators, installed building materials; systems and equipment for the purpose of
supplying or distributing heating, cooling, electricity, gas, water, air, or light; antennas,
cable, wiring and conduits used in connection with radio, television, computers, security,
fire prevention, or fire detection or otherwise used to carry electronic signals; telephone
systems and equipment; elevators and related machinery and equipment; fire detection,
prevention and extinguishing systems and apparatus; security and access control
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systems and apparatus; plumbing systems; water heaters, ranges, stoves, microwave
ovens, refrigerators, dishwashers, garbage disposals, washers, dryers and other
appliances; light fixtures, awnings, storm windows and storm doors; pictures, screens,
blinds, shades, curtains and curtain rods; mirrors; cabinets, paneling, rugs and floor and
wall coverings; fences, trees and plants; swimming pools; playground and exercise
equipment and classroom furnishings and equipment.
(j)
“Governmental Authority” means any board, commission, department
or body of any municipal, county, state, tribal or federal governmental unit, including any
U.S. territorial government, and any public or quasi-public authority, or any subdivision
of any of them, that has or acquires jurisdiction over the Mortgaged Property, including
the use, operation or improvement of the Mortgaged Property.
(k)
“HUD” means the United States Department of Housing and Urban
Development acting by and through the Secretary in the capacity as insurer or holder of
the Loan under the authority of the National Housing Act, as amended, the Department
of Housing and Urban Development Act, as amended, or any other federal law or
regulation pertaining to the Loan or the Mortgaged Property.
(l)

“Impositions” and “Imposition Deposits” are defined in Section 8(a).

(m) “Improvements” means the buildings, structures, and alterations now
constructed or at any time in the future constructed or placed upon the Land, including
any future replacements and additions.
(n)
“Indebtedness” means the principal of, interest on, and all other amounts
due at any time under the Note, this Security Instrument, and any other Loan
Document, including prepayment premiums, late charges, default interest, and
advances to protect the security of this Security Instrument as provided in Section 13.
(o)

“Indemnitees” is defined in Section 48(k).

(p)

“Land” means the estate in realty described in Exhibit A.

(q)
“Leases” means all present and future leases, subleases, licenses,
concessions or grants or other possessory interests now or hereafter in force, whether
oral or written, covering or affecting the Mortgaged Property, or any portion of the
Mortgaged Property (including but not limited to proprietary leases, non-residential
leases or occupancy agreements if Borrower is a cooperative housing corporation), and
all modifications, extensions or renewals. (Ground leases that create a leasehold
interest in the Land and where the Borrower’s leasehold is security for the Loan are not
included in this definition.)
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(r)
“Lender” means the entity identified as “Lender” in the first paragraph of
this Security Instrument, or any subsequent holder of the Note, and whenever the term
“Lender” is used herein, the same shall be deemed to include the obligee, or the
beneficiary of this Security Instrument, and so long as the Loan is insured or held by
HUD, shall also be deemed to be the mortgagee as defined by Program Obligations.
(s)

“Lien” is defined in Section 17.

(t)

“Loan” is defined in the opening paragraphs of this Security Instrument.

(u)

“Loan Application” is defined in Section 41.

(v)
“Loan Documents” means the Note, this Security Instrument, the
Regulatory Agreement and all other agreements, instruments and documents which are
now existing or are in the future required by, delivered to and/or assigned to Lender
and/or HUD in connection with or related to the Loan, as such documents may be
amended from time to time.
(w)
“Mortgaged Property” means all of Borrower's present and future right,
title and interest in and to all of the following whether now held or later acquired:
(1)

the Land;

(2)

the Improvements;

(3)

the Fixtures;

(4)

the Personalty;

(5)

all current and future rights, including air rights, development rights,
zoning rights and other similar rights or interests, easements,
tenements, rights-of-way, strips and gores of land, streets, alleys,
roads, sewer rights, waters, watercourses, and appurtenances
related to or benefiting the Land or the Improvements, or both, and
all rights-of-way, streets, alleys and roads which may have been or
may in the future be vacated;

(6)

all insurance policies covering the Mortgaged Property, and all
proceeds paid or to be paid by any insurer of the Land, the
Improvements, the Fixtures, the Personalty or any other part of the

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Mortgaged Property, whether or not Borrower obtained such
insurance policies pursuant to Lender’s requirement;
(7)

all awards, payments and other compensation made or to be made
by any Governmental Authority with respect to the Land, the
Improvements, the Fixtures, the Personalty or any other part of the
Mortgaged Property, including any awards or settlements resulting
from condemnation proceedings or the total or partial taking of the
Land, the Improvements, the Fixtures, the Personalty or any other
part of the Mortgaged Property under the power of eminent domain
or otherwise and including any conveyance in lieu thereof;

(8)

all contracts, options and other agreements for the sale of the Land,
the Improvements, the Fixtures, the Personalty or any other part of
the Mortgaged Property entered into by Borrower now or in the
future, including cash or securities deposited to secure
performance by parties of their obligations;

(9)

all proceeds (cash or non-cash), liquidated claims or other
consideration from the conversion, voluntary or involuntary, of any
of the Mortgaged Property and the right to collect such proceeds,
liquidated claims or other consideration;

(10)

all Rents and Leases;

(11)

all earnings, royalties, instruments, accounts, accounts receivable,
supporting obligations, issues and profits from the Land, the
Improvements or any other part of the Mortgaged Property, and all
undisbursed proceeds of the Loan and, if Borrower is a cooperative
housing corporation, maintenance charges or assessments payable
by shareholders or residents;

(12)

all Imposition Deposits;

(13)

all refunds or rebates of Impositions by any Governmental Authority
or insurance company (other than refunds applicable to periods
before the real property tax year in which this Security Instrument is
dated);

(14)

all forfeited tenant security deposits under any Lease;

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(15)

all names under or by which any of the above Mortgaged Property
may be operated or known, and all trademarks, trade names, and
goodwill relating to any of the Mortgaged Property;

(16)

all deposits and/or escrows held by or on behalf of Lender under
Collateral Agreements; and

(17) all awards, payments, settlements or other compensation resulting
from litigation involving the Project.
Notwithstanding items numbered (1) through (17) above or Section 33 below, Borrower
may hold non-project funds in separate, segregated accounts, specifically labeled as
non-project funds, which are not part of the Mortgaged Property. These accounts may
hold those assets owned or received by Borrower, through equity contributions, gifts, or
loan proceeds, that were not required by HUD to become part of the Mortgaged
Property and were not made a part of the Mortgaged Property by Borrower and funds
released from the Mortgaged Property in compliance with Program Obligations (such as
Distributions of Surplus Cash and loan repayments, if allowed). [If such accounts
already exist, it is acceptable to identify them here, for example: The [name of
accounts/reserves] are designated non-project fund accounts.]
(x)
“Note” means the Note executed by Borrower described in this Security
Instrument, including all schedules, riders, allonges and addenda, as such Note may be
amended from time to time.
(y)

“Notice” is defined in Section 31.

(z)

“O&M Program” is defined in Section 48(b).

(aa) “Personalty” means all equipment, inventory, and general intangibles.
The definition of “Personalty” includes furniture, furnishings, machinery, building
materials, appliances, goods, supplies, tools, books, records (whether in written or
electronic form), computer equipment (hardware and software) and other tangible or
electronically stored personal property (other than Fixtures) that are owned, leased or
used by Borrower now or in the future in connection with the ownership, management or
operation of the Land or the Improvements or are located on the Land or in the
Improvements, and any operating agreements relating to the Land or the
Improvements, and any surveys, plans and specifications and contracts for
architectural, engineering and construction services relating to the Land or the
Improvements, choses in action and all other intangible property and rights relating to
the operation of, or used in connection with, the Land or the Improvements, including all
certifications, approvals and governmental permits relating to any activities on the Land.
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Intangibles shall also include all cash and cash escrow funds related to the Project,
such as but not limited to: Reserve for Replacement accounts, bank accounts, Residual
Receipts accounts, and investments.
(bb)

“Principal” is defined in the Regulatory Agreement.

(cc)

“Project” and “Project Assets” mean the Mortgaged Property.

(dd) “Program Obligations” means (1) all applicable statutes and any
regulations issued by the Secretary pursuant thereto that apply to the Project, including
all amendments to such statutes and regulations, as they become effective, except that
changes subject to notice and comment rulemaking shall become effective only upon
completion of the rulemaking process, and (2) all current requirements in HUD
handbooks and guides, notices, and mortgagee letters that apply to the Project, and all
future updates, changes and amendments thereto, as they become effective, except
that changes subject to notice and comment rulemaking shall become effective only
upon completion of the rulemaking process, and provided that such future updates,
changes and amendments shall be applicable to the Project only to the extent that they
interpret, clarify and implement terms in this Security Instrument rather than add or
delete provisions from such document. Handbooks, guides, notices, and mortgagee
letters are available on “HUDCLIPS,” at www.hud.gov.
(ee)

“Property Jurisdiction” is defined in Section 30(a).

(ff)
“Regulatory Agreement” means the agreement between the Borrower
and HUD establishing Borrower’s obligations in the operation of the Mortgaged Property
and the rights and powers of HUD.
(gg)

“Remedial Work” is defined in Section 48(i).

(hh) “Rents” means all rents (whether from residential or non-residential
space), revenues, issues, profits, (including carrying charges, maintenance fees, and
other cooperative revenues, and fees received from leasing space on the Mortgaged
Property), and other income of the Land or the Improvements, gross receipts,
receivables, parking fees, laundry and vending machine income and fees and charges
for food and other services provided at the Mortgaged Property, whether now due, past
due, or to become due, Residual Receipts, and escrow accounts, however and
whenever funded and wherever held.
(ii)

“Residual Receipts” is defined in the Regulatory Agreement.

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(jj)
“Taxes” means all taxes, assessments, vault rentals and other charges, if
any, general, special or otherwise, including all assessments for schools, public
betterments and general or local improvements, which are levied, assessed or imposed
by any public authority or quasi-public authority, and which, if not paid, could become a
lien on the Land or the Improvements.
(kk) “Waste” means a failure to keep the Mortgaged Property in decent, safe
and sanitary condition and in good repair. During any period in which HUD insures this
Loan or holds a security interest on the Mortgaged Property, Waste is committed when,
without Lender’s and HUD’s express written consent, Borrower:

2.

(1)

physically changes the Mortgaged Property, whether negligently or
intentionally, in a manner that reduces its value;

(2)

fails to maintain and repair the Mortgaged Property in accordance
with Program Obligations;

(3)

fails to pay before delinquency any Taxes secured by a lien having
priority over this Security Instrument;

(4)

materially fails to comply with covenants in the Note, this Security
Instrument or the Regulatory Agreement respecting physical care,
maintenance, construction, abandonment, demolition, or insurance
against casualty of the Mortgaged Property; or

(5)

retains possession of Rents to which Lender or its assigns have the
right of possession under the terms of the Loan Documents.

UNIFORM COMMERCIAL CODE SECURITY AGREEMENT.

This Security Instrument is also a security agreement under the Uniform
Commercial Code for any of the Mortgaged Property which, under applicable law, may
be subject to a security interest under the Uniform Commercial Code, whether acquired
now or in the future, and all products and cash proceeds and non-cash proceeds
thereof (collectively, “UCC Collateral”), and Borrower hereby grants to Lender a
security interest in the UCC Collateral. Borrower hereby authorizes Lender to file
financing statements, continuation statements and amendments, in such form as
Lender may require to perfect or continue the perfection of this security interest.
Borrower agrees to enter into any agreements, in form as Lender may require, that the
Uniform Commercial Code requires to perfect and continue perfection of Lender’s
security interest in the portion of UCC Collateral that requires Lender control to attain
such perfection. Borrower shall pay all filing costs and all costs and expenses of any
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record searches for financing statements that Lender may require. Without the prior
written consent of Lender, Borrower shall not create or permit to exist any other lien or
security interest in any of the UCC Collateral. Except for such UCC filings disclosed to
Lender and HUD that are to be released in connection with the financing of the Loan or
that are otherwise consented to in writing by Lender and HUD, Borrower represents and
warrants to Lender that no UCC filings have been made against Borrower, the Project
or the Project Assets prior to the initial or initial/final endorsement of the Note by HUD,
and Borrower has taken and shall take no action that would give rise to such UCC
filings, except for any UCC filings in connection with the acquisition of any Personalty
that has been approved in writing by HUD. Borrower also represents and warrants to
Lender that it has not entered into, and will not enter into, any agreement with any party
other than Lender in conjunction with the present Loan transaction that allows for the
perfection of a security interest in any portion of the UCC Collateral. Borrower will
promptly notify Lender of any change in its business or principal location, name, or other
organizational change that would require a filing under the UCC to continue perfection
of Lender’s interest, and hereby authorizes Lender to file, and will assist Lender in filing,
any forms necessary to continue the effectiveness of existing financing statements or
for perfection of Lender’s security interest. If an Event of Default has occurred and is
continuing, Lender shall have the remedies of a secured party under the Uniform
Commercial Code, in addition to all remedies provided by this Security Instrument or
existing under applicable law. In exercising any remedies, Lender may exercise its
remedies against the UCC Collateral separately or together, and in any order, without in
any way affecting the availability of Lender's other remedies. This Security Instrument
constitutes a fixture filing financing statement with respect to any part of the Mortgaged
Property which is or may become a Fixture and which shall be filed in the local real
estate records.
3.
ASSIGNMENT OF RENTS; APPOINTMENT OF RECEIVER; LENDER IN
POSSESSION.
(a)
As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all Rents. It is the intention of Borrower
to establish a present, absolute and irrevocable transfer and assignment to Lender of all
Rents and to authorize and empower Lender to collect and receive all Rents without the
necessity of further action on the part of Borrower. Promptly upon request by Lender,
Borrower agrees to execute and deliver such further assignments as Lender may from
time to time require. Borrower and Lender intend this assignment of Rents to be
immediately effective and to constitute an absolute present assignment and not an
assignment for additional security only, provided that prior to an Event of Default,
Borrower is entitled to Rents. For purposes of giving effect to this absolute assignment
of Rents, and for no other purpose, Rents shall not be deemed to be a part of the
Mortgaged Property. However, if this present, absolute and unconditional assignment
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of Rents is not enforceable by its terms under the laws of the Property Jurisdiction, then
the Rents shall be included as a part of the Mortgaged Property and it is the intention of
Borrower that in this circumstance this Security Instrument create and perfect a lien on
Rents in favor of Lender, which lien shall be effective as of the date of this Security
Instrument.
(b)
After the occurrence of an Event of Default, Borrower authorizes Lender to
collect, sue for and compromise Rents and directs each tenant (whether residential or
non-residential) of the Mortgaged Property to pay all Rents to, or as directed by, Lender.
However, until the occurrence of an Event of Default, Lender hereby grants to Borrower
a revocable license to collect and receive all Rents for use in accordance with the
provisions of this Security Instrument (and the Regulatory Agreement during the period
of its applicability), to hold all Rents in trust for the benefit of Lender and to apply all
Rents to pay the installments of interest and principal then due and payable under the
Note and the other amounts then due and payable under this Security Instrument,
including Imposition Deposits, and to pay the current costs and expenses of managing,
operating and maintaining the Mortgaged Property, including utilities, Taxes and
insurance premiums (to the extent not included in Imposition Deposits), tenant
improvements and other capital expenditures. So long as no Event of Default has
occurred and is continuing, the Rents remaining after application pursuant to the
preceding sentence may be retained by Borrower free and clear of, and released from,
Lender's rights with respect to Rents under this Security Instrument, unless otherwise
restricted by the terms of the Regulatory Agreement during the period of its applicability.
From and after the occurrence of an Event of Default, and without the necessity of
Lender entering upon and taking and maintaining control of the Mortgaged Property
directly, or by a receiver, Borrower’s license to collect Rents shall automatically
terminate and Lender shall without Notice be entitled to all Rents as they become due
and payable, including Rents then due and unpaid. Borrower shall pay to Lender upon
demand all Rents to which Lender is entitled. At any time on or after the date of
Lender’s demand for Rents, Lender may give, and Borrower hereby irrevocably
authorizes Lender to give, Notice to all tenants of the Mortgaged Property instructing
them to pay all Rents to Lender. No tenant shall be obligated to inquire further as to the
occurrence or continuance of an Event of Default, and no tenant shall be obligated to
pay to Borrower any amounts which are actually paid to Lender in response to such a
Notice. Any such Notice by Lender shall be delivered to each tenant personally, by mail
or by delivering such demand to each rental unit. Borrower shall not interfere with and
shall cooperate with Lender's collection of such Rents.
(c)
Borrower represents and warrants to Lender that Borrower has not
executed any prior assignment of Rents, that Borrower has not performed, and
Borrower covenants and agrees that it shall not perform, any acts and has not
executed, and shall not execute, any instrument that would prevent Lender from
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exercising its rights under Section 3, and that at the time of execution of this Security
Instrument there has been no anticipation or prepayment of any Rents for more than
two months prior to the due dates of such Rents. Borrower shall not collect or accept
payment of any Rents more than two months prior to the due dates of such Rents (other
than collections in connection with transactions as approved by HUD).
(d)
If an Event of Default has occurred and is continuing, Lender may,
regardless of the adequacy of Lender's security or the solvency of Borrower and even in
the absence of Waste (but only with the prior written approval of HUD in the event of
Covenant Defaults), enter upon and take and maintain full control of the Mortgaged
Property in order to perform all acts that Lender in its discretion determines to be
necessary or desirable for the operation and maintenance of the Mortgaged Property,
including the execution, cancellation or modification of Leases, the collection of all
Rents, the making of repairs to the Mortgaged Property and the execution or termination
of contracts providing for the management, operation or maintenance of the Mortgaged
Property, for the purposes of enforcing the assignment of Rents pursuant to
Section 3(a), protecting the Mortgaged Property or the security of this Security
Instrument, or for such other purposes as Lender in its discretion may deem necessary
or desirable. Alternatively, if an Event of Default has occurred and is continuing,
regardless of the adequacy of Lender's security, without regard to Borrower’s solvency
and without the necessity of giving prior Notice (oral or written) to Borrower, Lender may
apply to any court having jurisdiction for the appointment of a receiver for the Mortgaged
Property to take any or all of the actions set forth in the preceding sentence. If Lender
elects to seek the appointment of a receiver for the Mortgaged Property at any time
after an Event of Default has occurred and is continuing, Borrower, by its execution of
this Security Instrument, expressly consents to the appointment of such receiver,
including the appointment of a receiver ex parte if permitted by applicable law. Lender
or the receiver, as the case may be, shall be entitled to receive a reasonable fee for
managing the Mortgaged Property. Immediately upon appointment of a receiver or
immediately upon Lender's entering upon and taking possession and control of the
Mortgaged Property, Borrower shall surrender possession of the Mortgaged Property to
Lender or the receiver, as the case may be, and shall deliver to Lender or the receiver,
as the case may be, all documents, records (including records on electronic or magnetic
media), accounts, surveys, plans, and specifications relating to the Mortgaged Property
and all security deposits and prepaid Rents. In the event Lender takes possession and
control of the Mortgaged Property, Lender may exclude Borrower and its
representatives from the Mortgaged Property. Borrower acknowledges and agrees that
the exercise by Lender of any of the rights conferred under Section 3 shall not be
construed to make Lender a lender-in-possession of the Mortgaged Property so long as
Lender, or authorized agent of Lender, has not entered into actual possession of the
Land and Improvements.

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(e)
If Lender enters the Mortgaged Property, Lender shall be liable to account
only to Borrower and only for those Rents actually received. Lender shall not otherwise
be liable to Borrower, anyone claiming under or through Borrower or anyone having an
interest in the Mortgaged Property, by reason of any act or omission of Lender under
Section 3, and Borrower hereby releases and discharges Lender from any such liability
to the fullest extent permitted by law.
(f)
If the Rents are not sufficient to meet the costs of taking control of and
managing the Mortgaged Property and collecting the Rents, any funds expended by
Lender for such purposes shall become an additional part of the Indebtedness as
provided in Section 13; provided that Lender shall have the right, but no obligation to
make any such advances; and provided further that so long as the Loan is insured by
HUD, no such advances by Lender shall become an additional part of the Indebtedness
unless such advances receive the prior written approval of HUD.
(g)
Any entering upon and taking of control of the Mortgaged Property by
Lender or the receiver, as the case may be, and any application of Rents as provided in
this Security Instrument shall not cure or waive any Event of Default or invalidate any
other right or remedy of Lender under applicable law or provided for in this Security
Instrument.
4.
ASSIGNMENT OF LEASES; LEASES AFFECTING THE MORTGAGED
PROPERTY.
(a)
As part of the consideration for the Indebtedness, Borrower absolutely and
unconditionally assigns and transfers to Lender all of Borrower's right, title and interest
in, to and under the Leases, including Borrower's right, power and authority to modify
the terms of any such Lease, or extend or terminate any such Lease. It is the intention
of Borrower to establish a present, absolute and irrevocable transfer and assignment to
Lender of all of Borrower’s right, title and interest in, to and under the Leases. Borrower
and Lender intend this assignment of the Leases to be immediately effective and to
constitute an absolute present assignment and not an assignment for additional security
only. For purposes of giving effect to this absolute assignment of the Leases, and for
no other purpose, the Leases shall not be deemed to be a part of the Mortgaged
Property. However, if this present, absolute and unconditional assignment of the
Leases is not enforceable by its terms under the laws of the Property Jurisdiction, then
the Leases shall be included as a part of the Mortgaged Property and it is the intention
of Borrower that in this circumstance this Security Instrument create and perfect a lien
on the Leases in favor of Lender, which lien shall be effective as of the date of this
Security Instrument.

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(b)
Until Lender gives Notice to Borrower of Lender's exercise of its rights
under this Section 4, Borrower shall have all rights, power and authority granted to
Borrower under any Lease (except as otherwise limited by this Section or any other
provision of this Security Instrument), including the right, power and authority to modify
the terms of any Lease or extend or terminate any Lease. Upon the occurrence of an
Event of Default and throughout its continuation, the permission given to Borrower
pursuant to the preceding sentence to exercise all rights, power and authority under
Leases shall automatically terminate. Borrower shall comply with and observe
Borrower's obligations under all Leases, including Borrower's obligations pertaining to
the maintenance and disposition of tenant security deposits.
(c)
Borrower acknowledges and agrees that the exercise by Lender, either
directly or by a receiver, of any of the rights conferred under this Section 4 shall not be
construed to make Lender a lender-in-possession of the Mortgaged Property so long as
Lender, or an authorized agent of Lender, has not entered into actual possession of the
Land and the Improvements. The acceptance by Lender of the assignment of the
Leases pursuant to Section 4(a) shall not at any time or in any event obligate Lender to
take any action under this Security Instrument or to expend any money or to incur any
expenses. Lender shall not be liable in any way for any injury or damage to person or
property sustained by any person or persons, firm or corporation in or about the
Mortgaged Property unless Lender is a lender-in-possession. Prior to Lender's actual
entry into and taking possession of the Mortgaged Property, Lender shall not (1) be
obligated to perform any of the terms, covenants and conditions contained in any Lease
(or otherwise have any obligation with respect to any Lease); (2) be obligated to appear
in or defend any action or proceeding relating to the Lease or the Mortgaged Property;
or (3) be responsible for the operation, control, care, management or repair of the
Mortgaged Property or any portion of the Mortgaged Property. The execution of this
Security Instrument by Borrower shall constitute conclusive evidence that all
responsibility for the operation, control, care, management and repair of the Mortgaged
Property is and shall be that of Borrower, prior to such actual entry and taking of
possession.
(d)
Upon delivery of Notice by Lender to Borrower of Lender's exercise of
Lender's rights under this Section 4 at any time after the occurrence of an Event of
Default, and without the necessity of Lender entering upon and taking and maintaining
control of the Mortgaged Property directly, by a receiver, or by any other manner or
proceeding permitted by the laws of the Property Jurisdiction, Lender immediately shall
have all rights, powers and authority granted to Borrower under any Lease, including
the right, power and authority to modify the terms of any such Lease, or extend or
terminate any such Lease.

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(e)
Borrower shall, promptly upon Lender's request, deliver to Lender an
executed copy of each residential Lease then in effect. All Leases for residential
dwelling units shall be acceptable to Lender and shall comply with Program Obligations.
(f)
Borrower shall not enter into any Lease for any portion of the Mortgaged
Property for non-residential use except with the prior written consent of Lender, and
Lender's prior written approval of the Lease agreement, consistent with Program
Obligations. Borrower shall not modify the terms of, or extend or terminate, any Lease
for non-residential use (including any Lease in existence on the date of this Security
Instrument) without the prior written consent of Lender. Borrower shall, without request
by Lender, deliver an executed copy of each non-residential Lease to Lender promptly
after such Lease is signed. All non-residential Leases, including renewals or extensions
of existing Leases, shall specifically provide that (i) such Leases are subordinate to the
lien of this Security Instrument, except when approved in writing by Lender in
accordance with Program Obligations, and (ii) the tenant shall, upon receipt after the
occurrence of an Event of Default of a written request from Lender, pay all Rents
payable under the Lease to Lender.
(g) Borrower shall not receive or accept Rent under any Lease (whether
residential or non-residential) for more than two months in advance.
5.
PAYMENT OF INDEBTEDNESS; PERFORMANCE UNDER LOAN
DOCUMENTS; PREPAYMENT PREMIUM. Borrower shall pay the Indebtedness when
due in accordance with the terms of the Note and this Security Instrument and shall
perform, observe and comply with all other provisions of the Note and this Security
Instrument. Borrower shall pay a prepayment premium in connection with certain
prepayments of the Indebtedness, including a payment made after Lender's exercise of
any right of acceleration of the Indebtedness, as provided in the Note.
6.
EXCULPATION. Except for personal liability expressly provided for in this
Security Instrument or in the Note or in the Regulatory Agreement, the execution of the
Note shall impose no personal liability upon Borrower or those parties listed in the
Section 50 Addendum to the Regulatory Agreement for payment of the Indebtedness
evidenced thereby, and in the Event of Default, the holder of the Note shall look solely
to the Mortgaged Property in satisfaction of the Indebtedness and will not seek or obtain
any deficiency or personal judgment against Borrower or those parties listed in the
Section 50 Addendum to the Regulatory Agreement, except such judgment or decree
as may be necessary to foreclose or bar its interest in the Mortgaged Property and all
other property mortgaged, pledged, conveyed or assigned to secure payment of the
Indebtedness; provided, that nothing in this Section 6 of this Security Instrument and no
action so taken shall operate to impair any obligation under the Regulatory Agreement

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of Borrower or those parties listed in the Section 50 Addendum to the Regulatory
Agreement.
7.

DEPOSITS FOR TAXES, INSURANCE AND OTHER CHARGES.

(a)
Borrower shall pay to and deposit with Lender, together with and in
addition to the monthly payments of interest or of principal and interest payable under
the terms of the Note on the first day of each month after the commencement of
amortization under the Note, and continuing until the debt secured hereby is paid in full,
the following sums:
(1)

an amount sufficient to provide Lender with funds to pay the next
mortgage insurance premium if this Security Instrument and the
Note are insured by HUD, or a monthly service charge, if they are
held by HUD, as follows:
(i) If and so long as the Note is insured under the provisions
of the National Housing Act, as amended, an amount
sufficient to accumulate in the hands of Lender one month
prior to its due date the annual mortgage insurance
premium; or
(ii) If and so long as the Note and this Security Instrument
are held by HUD, a monthly service charge in an amount
equal to the lesser of the amount permitted by law or the
amount set forth in Program Obligations computed for each
successive year beginning with the first day of the month
following the date of this Security Instrument, or the first day
of the month following assignment, if the Note and this
Security Instrument are assigned to HUD without taking into
account delinquencies or prepayment; and

(2)

a sum equal to the ground rents, if any, next due, plus the
premiums that will next become due and payable on policies of fire
and other property insurance covering the premises covered
hereby, plus water rates, Taxes, municipal/government utility
charges and special assessments next due on the premises
covered hereby (all as estimated by Lender) less all sums already
paid therefore divided by the number of months to the date when
such ground rents, premiums, water rates, Taxes, municipal/utility
charges and special assessments will become delinquent, such

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sums to be held by Lender in trust to pay said ground rents,
premiums, water rates, Taxes, and special assessments; and
(3)

all payments and deposits mentioned in the two preceding
paragraphs of this subsection and all payments to be made under
the Note shall be added together and the aggregate amount thereof
shall be paid each month in a single payment or deposit to be
applied by Lender to the following items in the order set forth:
(i) mortgage insurance premium charges under the Contract
of Insurance;
(ii) ground rents, if Lender has required them to be escrowed
with Lender, Taxes, special assessments, water rates,
municipal/government utility charges, fire and other property
insurance premiums;
(iii) interest on the Note; and
(iv) amortization of the principal of the Note.

(b)
Borrower shall pay to and deposit with Lender all other escrows and
deposits, including any Reserve for Replacements.
(c)
Borrower shall deposit with Lender such amounts as may be required by
any Collateral Agreement and shall perform all other obligations of Borrower under each
Collateral Agreement. Collateral Agreement deposits shall be held in an institution
(which may be Lender, if Lender is such an institution) whose deposits or accounts are
insured or guaranteed by a federal agency and in accordance with Program Obligations.
8.

IMPOSITION DEPOSITS.

(a)
In the event Borrower fails to pay any sums provided for in this Security
Instrument, Lender, at its option, may pay the same. Any excess funds accumulated
under Section 7(a) remaining after payment of the items therein mentioned, shall be
credited to subsequent monthly payments of the same nature required thereunder; but if
any such item shall exceed the estimate therefore, or if Borrower shall fail to pay any
other governmental or municipal charge, Borrower shall forthwith make good the
deficiency or pay the charge before the same become delinquent or subject to interest
or penalties and in default thereof Lender may pay the same. All sums paid or
advanced by Lender and any sums which Lender may be required to advance to pay
mortgage insurance premiums shall be added to the Indebtedness and shall bear
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interest from the date of payment at the rate specified in the Note and shall be due and
payable on demand. In case of termination of the Contract of Insurance by prepayment
of the Indebtedness in full or otherwise (except as hereinafter provided), accumulations
under Section 7(a) not required to pay sums due under Section 7(a)(3) shall be credited
to Borrower. If the Mortgaged Property is sold under foreclosure or is otherwise
acquired by Lender after an Event of Default, any remaining balance of the
accumulations under Section 7(a) shall be credited to the principal under the Note as of
the date of the commencement of foreclosure proceedings or as of the date the
Mortgaged Property is otherwise acquired; and accumulations under Section 7 shall be
likewise credited unless required to pay sums due HUD under Section 7(a)(3). The
amounts deposited under Section 7 and Section 8 are collectively referred to in this
Security Instrument as the “Imposition Deposits”. The obligations of Borrower for
which the Imposition Deposits are required are collectively referred to in this Security
Instrument as “Impositions”. The amount of the Imposition Deposits shall be sufficient
to enable Lender to pay applicable Impositions before the last date upon which such
payment may be made without any penalty or interest charge being added. Lender
shall maintain records indicating how much of the monthly Imposition Deposits and how
much of the aggregate Imposition Deposits held by Lender are held for the purpose of
paying Taxes, insurance premiums and each other obligation of Borrower for which
Imposition Deposits are required. Any waiver by Lender of the requirement that
Borrower remit Imposition Deposits to Lender may be revoked by Lender, in Lender's
discretion, at any time upon Notice to Borrower.
(b)
Imposition Deposits shall be held in accounts insured or guaranteed by a
federal agency and in accordance with Program Obligations. Lender shall apply the
Imposition Deposits to pay Impositions so long as no Event of Default has occurred and
is continuing. Unless required by Program Obligations, Lender shall not be required to
pay Borrower any interest, earnings or profits on the Imposition Deposits with the
exception of the Reserve for Replacement account or Residual Receipts account (if
any). Borrower hereby pledges and grants to Lender a security interest in the
Imposition Deposits as additional security for all of Borrower's obligations under this
Security Instrument and the Note. Any amounts deposited with Lender under Section 7
shall not be trust funds, nor shall they operate to reduce the Indebtedness.
(c)
If Lender receives a bill or invoice for an Imposition, Lender shall pay the
Imposition from the Imposition Deposits held by Lender. Lender shall have no
obligation to pay any Imposition to the extent it exceeds Imposition Deposits then held
by Lender. Lender may pay an Imposition according to any bill, statement or estimate
from the appropriate public office or insurance company without inquiring into the
accuracy of the bill, statement or estimate or into the validity of the Imposition.

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(d)
If at any time the amount of the Imposition Deposits held by Lender (other
than the Reserve for Replacement or Residual Receipts, if any) for payment of a
specific Imposition exceeds the amount reasonably deemed necessary by Lender plus
one-sixth of such estimate, the excess shall be credited against future installments of
Imposition Deposits. If at any time the amount of the Imposition Deposits held by
Lender for payment of a specific Imposition is less than the amount reasonably
estimated by Lender to be necessary plus one-sixth of such estimate, Borrower shall
pay to Lender the amount of the deficiency within 15 days after Notice from Lender.
9.
REGULATORY AGREEMENT. Borrower and HUD have executed a
Regulatory Agreement, which is being recorded simultaneously with this Security
Instrument, and is incorporated in and made a part of this Security Instrument. Upon
Default of the Regulatory Agreement and at the direction of HUD, Lender shall declare
the whole of the Indebtedness to be due and payable.
10.
APPLICATION OF PAYMENTS. If at any time Lender receives, from
Borrower or otherwise, any amount applicable to the Indebtedness which is less than all
amounts due and payable at such time, Lender must apply that payment to amounts
then due and payable in the manner and in the order set forth in Section 7(a)(3).
Neither Lender's acceptance of an amount that is less than all amounts then due and
payable nor Lender's application of such payment in the manner authorized shall
constitute or be deemed to constitute either a waiver of the unpaid amounts or an
accord and satisfaction. Notwithstanding the application of any such amount to the
Indebtedness, Borrower’s obligations under this Security Instrument and the Note shall
remain unchanged.
11.
COMPLIANCE WITH LAWS. Borrower shall comply with all applicable:
laws; ordinances; regulations; requirements of any Governmental Authority; lawful
covenants and agreements recorded against the Mortgaged Property; so long as the
Loan is insured or held by HUD, the Regulatory Agreement, and Program Obligations
including lead-based paint maintenance requirements of 24 C.F.R. Part 35, Subpart G,
and any successor regulations; including but not limited to those of the foregoing
pertaining to: health and safety; construction of Improvements on the Mortgaged
Property; fair housing; civil rights; zoning and land use; Leases; and maintenance and
disposition of tenant security deposits; and, with respect to all of the foregoing, all
subsequent amendments, revisions, promulgations or enactments. Borrower shall at all
times maintain records sufficient to demonstrate compliance with the provisions of this
Section 11. Borrower shall take appropriate measures to prevent, and shall not engage
in or knowingly permit, any illegal activities at the Mortgaged Property, including those
that could endanger tenants or visitors, result in damage to the Mortgaged Property,
result in forfeiture of the Mortgaged Property, or otherwise impair the lien created by this
Security Instrument or Lender's interest in the Mortgaged Property. Borrower
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represents and warrants to Lender that no portion of the Mortgaged Property has been
or will be purchased with the proceeds of any illegal activity.
12.
USE OF PROPERTY. Unless permitted by applicable law and approved
by Lender, Borrower shall not (a) allow changes in the use for which all or any part of
the Mortgaged Property is being used at the time this Security Instrument was
executed, (b) convert any individual dwelling units or common areas to commercial use,
(c) initiate or acquiesce in a change in the zoning classification of the Mortgaged
Property that results in any change in permitted use that was in effect at the time of
initial/final endorsement, (d) establish any condominium or cooperative regime with
respect to the Mortgaged Property, (e) materially change any unit configurations or
change the number of units in the Mortgaged Property, (f) combine all or any part of the
Mortgaged Property with all or any part of a tax parcel which is not part of the
Mortgaged Property, (g) subdivide or otherwise split any tax parcel constituting all or
any part of the Mortgaged Property, or (h) so long as the Note is insured or held by
HUD, permit the Mortgaged Property to be used as transient housing or as a hotel in
violation of Section 513 of the National Housing Act, as amended.
13.

PROTECTION OF LENDER'S SECURITY.

(a)
If Borrower fails to perform any of its obligations under this Security
Instrument, Note or Regulatory Agreement, or if any action or proceeding is
commenced which purports to affect the Mortgaged Property, Lender's security or
Lender's rights under this Security Instrument, including eminent domain, insolvency,
Waste, code enforcement, civil or criminal forfeiture, enforcement of Hazardous
Materials Laws, fraudulent conveyance or reorganizations or proceedings involving a
bankrupt or decedent, then Lender at Lender's option may make such appearances,
advance such sums and take such actions as Lender reasonably deems necessary to
perform such obligations of Borrower and to protect Lender's interest, including
(1) payment of fees and out-of-pocket expenses of attorneys (including fees for
litigation at all levels), accountants, inspectors and consultants, (2) entry upon the
Mortgaged Property to make repairs or secure the Mortgaged Property, (3) procurement
of the insurance required by Section 19, and (4) payment of amounts which Borrower
has failed to pay under Section 16 or any other Section of this Security Instrument.
(b)
Any amounts advanced by Lender for taxes, special assessments, or
water rates (which are liens prior to the Security Instrument), for insuring the Project, or
for mortgage insurance premiums, which amounts are paid after an Event of Default,
shall be added to, and become part of the Indebtedness, and shall be immediately due
and payable and shall bear interest from the date of the advance until paid at the
Interest Rate specified in the Note. So long as the Loan is insured or held by HUD,
Lender does not have any obligation to make advances except as required under
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Program Obligations, and any advance by Lender other than as required by Program
Obligations requires prior written HUD approval before such advance can be added to
the Indebtedness.
(c)
Nothing in Section 13 shall require Lender to incur any expense or take
any action to protect its security.
14.
INSPECTION. Upon reasonable notice, Lender, its agents,
representatives, and designees, may make or cause to be made entries upon and
inspections of the Mortgaged Property (including any environmental inspections and
tests) during normal business hours, or at any other reasonable time.
15.

BOOKS AND RECORDS; FINANCIAL REPORTING.

(a)
Borrower shall keep and maintain at all times at the Mortgaged Property or
the management agent's offices, and upon Lender's request shall make available at the
Mortgaged Property, complete and accurate books of account and records (including
copies of supporting bills and invoices) adequate to reflect correctly the operation of the
Mortgaged Property, and copies of all written contracts, Leases, and other instruments
that affect the Mortgaged Property. The books, records, contracts, Leases and other
instruments shall be subject to examination and inspection at any reasonable time by
Lender.
(b)
If an Event of Default has occurred and is continuing, Borrower shall, at
Borrower’s expense, deliver to Lender upon written demand all books and records
relating to the Mortgaged Property or its operation, which shall be maintained at the
Mortgaged Property.
(c)
Borrower authorizes Lender to obtain a credit report on Borrower, at
Borrower’s expense, at any time.
(d)
Within 120 days after the end of each fiscal year of Borrower, Borrower
shall furnish to Lender a statement of income and expenses of Borrower’s operation of
the Mortgaged Property for that fiscal year, a statement of changes in financial position
of Borrower relating to the Mortgaged Property for that fiscal year and, when requested
by Lender, a balance sheet showing all assets and liabilities of Borrower relating to the
Mortgaged Property as of the end of that fiscal year. If Borrower’s fiscal year is other
than the calendar year, Borrower must also submit to Lender a year-end statement of
income and expenses within 120 days after the end of the calendar year. Lender also
may require that any statements, schedules or reports required to be delivered to
Lender under this Section 15 be audited at Borrower’s expense by independent certified
public accountants acceptable to Lender. If Borrower fails to provide in a timely manner
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the statements, schedules and reports required by this Section 15, Lender shall have
the right to have Borrower’s books and records audited, at Borrower’s expense, by
independent certified public accountants selected by Lender in order to obtain such
statements, schedules and reports, and all related costs and expenses of Lender shall
become immediately due and payable and shall become an additional part of the
Indebtedness. Notwithstanding the foregoing, however, so long as the Loan is insured
or held by HUD, Borrower’s obligation under this subsection (d) shall be satisfied by the
delivery to Lender, concurrently with its delivery to HUD, of a copy of the annual
financial statement required to be delivered to HUD in accordance with the Regulatory
Agreement.
(e)
Borrower shall deliver to Lender, within 15 days, copies of all operating
budgets, capital budgets, and other records or documents concerning the Mortgaged
Property or Borrower, reasonably requested by Lender.
16.

TAXES; OPERATING EXPENSES.

(a)
Subject to the provisions of Section 16(c) and Section 16(d), Borrower
shall pay, or cause to be paid, all Taxes when due and before the addition of any
interest, fine, penalty or cost for nonpayment.
(b)
Subject to the provisions of Section 16(c), Borrower shall pay the
expenses of operating, managing, maintaining and repairing the Mortgaged Property
(including insurance premiums, utilities, repairs and replacements) before the last date
upon which each such payment may be made without any penalty or interest charge
being added.
(c)
As long as no Event of Default exists and Borrower has timely delivered to
Lender any bills or premium notice that it has received, Borrower shall not be obligated
to pay Taxes, insurance premiums or any other individual Imposition to the extent that
sufficient Imposition Deposits are held by Lender for the purpose of paying that specific
Imposition. If an Event of Default exists, Lender may exercise any rights Lender may
have with respect to Imposition Deposits without regard to whether Impositions are then
due and payable; provided that so long as the Loan is insured by HUD, Lender’s
exercise of its rights shall be subject to Program Obligations pertaining to claims for
mortgage insurance benefits. Lender shall have no liability to Borrower for failing to pay
any Impositions to the extent that any Event of Default has occurred and is continuing,
insufficient Imposition Deposits are held by Lender at the time an Imposition becomes
due and payable or Borrower has failed to provide Lender with bills and premium notice
as provided above.

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(d)
Borrower, at its own expense, and, so long as the Loan is insured or held
by HUD, in accordance with the Regulatory Agreement, may contest by appropriate
legal proceedings, conducted diligently and in good faith, the amount or validity of any
Imposition other than insurance premiums, if (1) Borrower notifies Lender of the
commencement or expected commencement of such proceedings, (2) the Mortgaged
Property is not in danger of being sold or forfeited, (3) Borrower deposits with Lender
reserves sufficient to pay the contested Imposition, if requested by Lender, and (4)
Borrower furnishes whatever additional security is required in the proceedings or is
reasonably requested by Lender, which may include the delivery to Lender of the
reserves established by Borrower to pay the contested Imposition.
(e)
Borrower shall promptly deliver to Lender a copy of all Notices of, and
invoices for, Impositions, and if Borrower pays any Imposition directly, Borrower shall
promptly furnish to Lender receipts evidencing such payments.
17.
LIENS; ENCUMBRANCES. (a) Borrower shall not permit the grant,
creation or existence of any mortgage, deed of trust, deed to secure debt, security
interest or other lien or encumbrance (“Lien”) on the Mortgaged Property (other than the
lien of this Security Instrument, any tax liens which are imposed before payment is due,
or any inferior liens which are approved in writing by HUD and Lender), whether
voluntary, involuntary or by operation of law, and whether or not such Lien has priority
over the lien of this Security Instrument. (b) Borrower shall not repay any HUDapproved inferior Lien from proceeds of the Loan nor from Project Assets other than
from Surplus Cash (as defined in the Regulatory Agreement) or Residual Receipts,
except, with the prior written approval of HUD, in the case of an inferior Lien created in
an operating loss loan insured pursuant to Section 223(d) of the Act or a supplement
loan insured pursuant to Section 241 of the Act.
18.
PRESERVATION, MANAGEMENT AND MAINTENANCE OF
MORTGAGED PROPERTY. Borrower (a) shall not commit Waste, (b) shall not
abandon the Mortgaged Property, (c) shall restore or repair promptly, in a good and
workmanlike manner, any damaged part of the Mortgaged Property to the equivalent of
its original condition, or such other condition as Lender may approve in writing, whether
or not litigation or insurance proceeds or condemnation awards are available to cover
any costs of such restoration or repair, (d) shall keep the Mortgaged Property in decent,
safe, and sanitary condition and good repair, including the replacement of Personalty
and Fixtures with items of equal or better function and quality, all in accordance with
Program Obligations, (e) shall provide for qualified management of the Mortgaged
Property by a residential rental property manager, (f) shall give Notice to Lender of and,
unless otherwise directed in writing by Lender, shall appear in and defend, any action or
proceeding that could impair the Mortgaged Property, Lender's security or Lender's
rights under this Security Instrument, (g) shall not (and shall not permit any tenant or
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other person to) remove, demolish or alter the Mortgaged Property or any part of the
Mortgaged Property except that Borrower may dispose of obsolete or deteriorated
Fixtures or Personalty if the same are replaced with like items of the same or greater
quality or value, or make minor alterations which do not impair the Mortgaged Property,
and (h) so long as the Loan is insured or held by HUD, shall not expend any Project
funds except from permissible withdrawals of Surplus Cash and except for Reasonable
Operating Expenses and necessary repairs without the prior written approval of HUD.
So long as the Loan is insured or held by HUD, all expenses incurred by Borrower in
connection with the Mortgaged Property shall be incurred in compliance with Program
Obligations.
19.

PROPERTY AND LIABILITY INSURANCE.

(a)
Borrower shall keep the Mortgaged Property insured at all times against
such hazards as Lender may from time to time require, which insurance shall include
but not be limited to coverage against loss by fire and allied perils, general boiler and
machinery coverage, builders all-risk and business income coverage. Lender’s
insurance requirements may change from time to time throughout the term of the
Indebtedness. If Lender so requires, such insurance shall also include sinkhole
insurance, mine subsidence insurance, earthquake insurance, and, if the Mortgaged
Property does not conform to applicable zoning or land use laws, building ordinance or
law coverage. If any of the Improvements are located in an area identified by the
Federal Emergency Management Agency (or any successor to that agency) as an area
having special flood hazards or when flood insurance is otherwise determined necessary
by HUD consistent with Program Obligations, Borrower shall maintain flood insurance
covering such Improvements and any machinery, equipment, Fixtures and furnishings
contained therein that are funded, in whole or in part, with Loan proceeds in an amount
at least equal to the greater of (1) the maximum flood insurance available for that type
of property under the National Flood Insurance Program or (2) an amount equal to the
replacement cost of the bottom two stories above grade, as determined by HUD,
provided that the amount of flood insurance need not exceed the outstanding principal
balance of the Note, and flood insurance need not be maintained beyond the term of the
Note. If Lender determines that flood insurance has not been obtained in the required
amount, Lender must notify Borrower of Borrower’s obligations to obtain the proper
flood insurance. If Borrower does not obtain such insurance within 45 days of the date
of this notification, Lender shall purchase such flood insurance on behalf of Borrower
and may charge Borrower for the cost of premiums and fees incurred by Lender in
purchasing the flood insurance.
(b)
All premiums on insurance policies required under Section 19(a) shall be
paid in the manner provided in Section 7, unless Lender has designated in writing
another method of payment. All such policies shall also be in a form approved by
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Lender. All policies of property damage insurance shall include a non-contributing, nonreporting mortgage clause in a form approved by Lender, and in favor of Lender (and
HUD, as their interests appear) and shall name as loss payee HUD and Lender, its
successors and assigns. Lender shall have the right to hold the original policies or
duplicate original policies of all insurance required by Section 19(a). Borrower shall
promptly deliver to Lender a copy of all renewal and other notices received by Borrower
with respect to the policies and all receipts for paid premiums. At least 30 days prior to
the expiration date of a policy, Borrower shall deliver to Lender evidence of continuing
coverage in form satisfactory to Lender.
(c)
Borrower shall maintain at all times commercial general liability insurance,
workers’ compensation insurance and such other liability, errors and omissions and
fidelity insurance coverages as Lender may from time to time require, or shall require
any appropriate party to maintain at all times commercial general liability insurance,
workers’ compensation insurance and such other liability, errors and omissions and
fidelity insurance coverages as Lender may from time to time require or such other
insurance coverage as required by Program Obligations.
(d)
All insurance policies and renewals of insurance policies required by this
Section 19 shall be in such amounts and for such periods as Lender may from time to
time require, and shall be issued by insurance companies satisfactory to Lender and in
accordance with Program Obligations. Lender shall have the right to effect insurance in
the event Borrower fails to comply with this Section.
(e)
Borrower shall comply with all insurance requirements and shall not permit
any condition to exist on the Mortgaged Property that would invalidate any part of any
insurance coverage that this Security Instrument requires Borrower to maintain.
(f)
In the event of loss, Borrower shall give immediate written Notice to the
insurance carrier and to Lender. Borrower hereby authorizes and appoints Lender as
attorney-in-fact for Borrower to make proof of loss, to adjust and compromise any
claims under policies of property damage insurance, to appear in and prosecute any
action arising from such property damage insurance policies, to collect and receive the
proceeds of property damage insurance, and to deduct from such proceeds Lender’s
expenses incurred in the collection of such proceeds. This power of attorney is coupled
with an interest and therefore is irrevocable. Borrower shall notify Lender of any
payment received from any insurer. Lender shall (1) hold the balance of such proceeds
to be used to reimburse Borrower for the cost of restoring and repairing the Mortgaged
Property to the equivalent of its original condition or to a condition approved by Lender,
or (2) apply the balance of such proceeds to the payment of the Indebtedness, whether
or not then due. No amount applied to the reduction of the principal amount of the
Indebtedness in accordance with this Section 19(f) shall be considered an optional
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prepayment as the term is used in this Security Instrument and the Note secured
hereby, nor relieve Borrower from continuing to make regular monthly payments in the
amount required by the Note. To the extent Lender determines to apply insurance
proceeds to restoration, Lender shall do so in accordance with Lender’s then-current
policies relating to the restoration of casualty damage on similar multifamily properties;
provided that so long as the Loan is insured or held by HUD, insurance proceeds shall
be applied as approved by HUD and in accordance with Program Obligations pursuant
to Section 19(g) below.
(g)
Lender shall not exercise its option to apply insurance proceeds to the
payment of the Indebtedness if all of the following conditions are met: (1) no Event of
Default (or any event which, with the giving of Notice or the passage of time, or both,
would constitute an Event of Default) has occurred and is continuing; (2) Lender
determines, in its discretion, that there will be sufficient funds to complete the
restoration; (3) Lender determines, in its discretion, that the rental income from the
Mortgaged Property after completion of the restoration will be sufficient to meet all
operating costs and other expenses, Imposition Deposits, deposits to reserves and loan
repayment obligations relating to the Mortgaged Property; and (4) Lender determines, in
its discretion, that the restoration will be completed before the earlier of (A) one year
before the maturity date of the Note or (B) one year after the date of the loss or
casualty. Further, so long as the Loan is insured by HUD, Lender may not exercise its
option to apply insurance proceeds to the payment of the Indebtedness without the prior
written approval of HUD. In seeking this approval, Lender shall provide evidence
acceptable to HUD that there has been a total loss of the Mortgaged Property such that
complete restoration is improbable. If HUD fails to give its approval to the use or
application of such funds within 60 days after the written request by Lender, Lender may
use or apply such funds for any of the purposes specified herein without the approval of
HUD.
(h)
If the Mortgaged Property is sold at a foreclosure sale or Lender or HUD
acquire title to the Mortgaged Property, Lender and HUD, as applicable, shall
automatically succeed to all rights of Borrower in and to any insurance policies and
unearned insurance premiums and in and to the proceeds of property damage
insurance resulting from any damage to the Mortgaged Property prior to such sale or
acquisition.
20.

CONDEMNATION.

(a)
Borrower shall promptly notify Lender of any action or proceeding relating
to any condemnation or other taking, or conveyance in lieu thereof, of all or any part of
the Mortgaged Property, whether direct or indirect condemnation. Borrower shall
appear in and prosecute or defend any action or proceeding relating to any
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condemnation unless otherwise directed by Lender in writing. Borrower authorizes and
appoints Lender as attorney-in-fact for Borrower to commence, appear in and
prosecute, in Lender’s or Borrower’s name, any action or proceeding relating to any
condemnation and to settle or compromise any claim in connection with any
condemnation. This power of attorney is coupled with an interest and therefore is
irrevocable. However, nothing contained in this Section 20 shall require Lender to incur
any expense or take any action. Borrower hereby transfers and assigns to Lender all
right, title and interest of Borrower in and to any award or payment with respect to (1)
any condemnation, or any conveyance in lieu of condemnation, and (2) any damage to
the Mortgaged Property caused by governmental action that does not result in a
condemnation.
(b)
All awards of compensation in connection with condemnation for public
use of or a taking of any of the Mortgaged Property shall be paid to Lender to be applied
(1) to fees, costs and expenses (including reasonable attorneys’ fees) incurred by
Lender; and (2) to the amount due under the Note secured hereby in (i) amounts equal
to the next maturing installment or installments of principal and (ii) with any balance to
be credited to the next payment due under the Note. After payment to Lender of all
fees, costs and expenses (including reasonable attorneys’ fees) incurred by Lender
under this Section 20, all awards of damages in connection with any condemnation for
public use of or damage to the Mortgaged Property, shall be paid to Lender to be
applied to an account held for and on behalf of Borrower, which account shall, at the
option of Lender, either be applied to the amount due under the Note as specified in the
preceding sentence, or be disbursed for the restoration. No amount applied to the
reduction of the principal amount due in accordance with this Section 20(b) shall be
considered an optional prepayment as the term is used in this Security Instrument and
the Note secured hereby, nor relieve Borrower from making regular monthly payments
commencing on the first day of the first month following the date of receipt of the award.
Lender is hereby authorized in the name of Borrower to execute and deliver necessary
releases or approvals or to appeal from such awards.
21.
TRANSFERS OF THE MORTGAGED PROPERTY OR INTERESTS IN
BORROWER.
(a)
So long as the Loan is insured or held by HUD, Borrower shall not, without
the prior written approval of HUD, convey, assign, transfer, pledge, hypothecate,
encumber or otherwise dispose of the Mortgaged Property or any interest therein or
permit the conveyance, assignment or transfer of any interest in Borrower (if the effect
of such conveyance, assignment or transfer is the creation or elimination of a Principal),
unless permitted by Program Obligations. Lender may charge Borrower a fee, in
accordance with Program Obligations, for Lender’s additional responsibilities related to
Borrower’s actions in this Section 21. Borrower need not obtain the prior written
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approval of HUD for: (1) a conveyance of the Mortgaged Property at a judicial or nonjudicial foreclosure sale under this Security Instrument, (2) inclusion of the Mortgaged
Property in a bankruptcy estate by operation of law under the United States Bankruptcy
Code, or (3) acquisition of an interest by inheritance or by Court decree.
(b)
If the Loan is no longer insured or held by HUD, Borrower shall not
convey, assign, transfer, pledge, hypothecate, encumber or otherwise dispose of the
Mortgaged Property or any interest therein or permit the conveyance, assignment or
transfer of any interest in Borrower without the prior written approval of Lender in its
sole discretion.
22.
EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute either a Monetary Event of Default or a Covenant Event of
Default under this Security Instrument:
(a)
Monetary Event of Default: Any failure by Borrower to pay or deposit
when due any amount required by the Note or Section 7(a) of this Security
Instrument.
(b)

Covenant Events of Default shall include:
(1)

fraud or material misrepresentation or material omission by
Borrower, any of its officers, directors, trustees, general partners,
members, managers or any guarantor in connection with (i) the
Loan Application for or creation of the Indebtedness, (ii) any
financial statement, rent roll, or other report or information provided
to Lender during the term of the Indebtedness, or (iii) any request
for Lender’s consent to any proposed action under this Security
Instrument or the Note;

(2)

the commencement of a forfeiture action or proceeding, whether
civil or criminal, which, in Lender’s reasonable judgment, could
result in a forfeiture of the Mortgaged Property or otherwise
materially impair the lien created by this Security Instrument or
Lender’s interest in the Mortgaged Property;

(3)

any material failure by Borrower to perform or comply with any of its
obligations under this Security Instrument (other than those
specified in Section 22(a) and Section 22(b)(1) and (b)(2)), as and
when required, which continues for a period of 30 days after Notice
of such failure by Lender to Borrower. However, no such Notice
shall apply in the case of any such material failure which could, in

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Lender’s judgment, absent immediate exercise by Lender of a right
or remedy under this Security Instrument, result in harm to Lender
or impairment of the Note or this Security Instrument; and,
(4)

so long as the Loan is insured or held by HUD, any failure by
Borrower to perform any of its obligations as and when required
under the Regulatory Agreement, which failure continues beyond
the applicable cure period, if any, specified in the Regulatory
Agreement; however, Violations under the terms of the Regulatory
Agreement may only be treated as a default under this Security
Instrument if HUD instructs Lender to treat them as such.

(c)
Lender shall deliver Notice to any Principal(s) of Borrower identified in
Section 31, within five (5) Business Days in each case where Lender has
delivered Notice to Borrower of an Event of Default, in order to provide such
Principal(s) an opportunity to cure either a Monetary Event of Default or a
Covenant Event of Default.
23.
REMEDIES CUMULATIVE. Each right and remedy provided in this
Security Instrument is distinct from all other rights or remedies under this Security
Instrument, the Note, or so long as the Loan is insured or held by HUD, HUD’s
remedies under the Regulatory Agreement or afforded by applicable law, and each shall
be cumulative and may be exercised concurrently, independently, or successively, in
any order.
24.

FORBEARANCE.

(a)
So long as the Loan is insured by HUD, Lender shall not without obtaining
the prior written consent of HUD, take any of the following actions: extend the time for
payment of all or any part of the Indebtedness; reduce the payments due under this
Security Instrument or the Note; release anyone liable for the payment of any amounts
under this Security Instrument or the Note; accept a renewal of the Note; modify the
terms and time of payment of the Indebtedness; join in any extension or subordination
agreement; release any Mortgaged Property; take or release other or additional
security; modify the rate of interest or period of amortization of the Note or change the
amount of the monthly installments payable under the Note; and otherwise modify this
Security Instrument or the Note. However, if the Contract of Insurance has been
terminated, Lender may (but shall not be obligated to) agree with Borrower to any of the
aforementioned actions in this Section and Lender shall not have to give Notice to or
obtain the consent of any guarantor or third-party obligor.

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(b)
Any forbearance by Lender in exercising any right or remedy under the
Note, this Security Instrument, or any other Loan Document or otherwise afforded by
applicable law, shall not be a waiver of or preclude the exercise of any right or remedy.
The acceptance by Lender of payment of all or any part of the Indebtedness after the
due date of such payment, or in an amount that is less than the required payment, shall
not be a waiver of Lender’s right to require prompt payment when due of all other
payments on account of the Indebtedness or to exercise any right or remedy for any
failure to make prompt payment. Enforcement by Lender of any security for the
Indebtedness shall not constitute an election by Lender of remedies so as to preclude
the exercise of any other right available to Lender. Lender’s receipt of any proceeds or
awards under Section 19 and Section 20 shall not operate to cure or waive any Event of
Default.
25.
LOAN CHARGES. If any applicable law limiting the amount of interest or
other charges permitted to be collected from Borrower in connection with the Loan is
interpreted so that any interest or other charge provided for in any Loan Document,
whether considered separately or together with other charges provided for in any Loan
Document, violates that law, and Borrower is entitled to the benefit of that law, that
interest or charge is hereby reduced to the extent necessary to eliminate that violation.
The amounts, if any, previously paid to Lender in excess of the permitted amounts shall
be applied by Lender to reduce the principal of the Indebtedness. For the purpose of
determining whether any applicable law limiting the amount of interest or other charges
permitted to be collected from Borrower has been violated, all Indebtedness that
constitutes interest, as well as all other charges made in connection with the
Indebtedness that constitute interest, shall be deemed to be allocated and spread
ratably over the stated term of the Note. Unless otherwise required by applicable law,
such allocation and spreading shall be effected in such a manner that the rate of
interest so computed is uniform throughout the stated term of the Note.
26.
WAIVER OF STATUTE OF LIMITATIONS. To the extent permitted by
law, Borrower hereby waives the right to assert any statute of limitations as a bar to the
enforcement of the lien of this Security Instrument or to any action brought to enforce
any of the Loan Documents.
27.
WAIVER OF MARSHALLING. Notwithstanding the existence of any
other security interests in the Mortgaged Property held by Lender or by any other party,
Lender shall have the right to determine the order in which any or all of the Mortgaged
Property shall be subjected to the remedies provided in this Security Instrument and the
Note or applicable law. Lender shall have the right to determine the order in which any
or all portions of the Indebtedness are satisfied from the proceeds realized upon the
exercise of such remedies. Borrower and any party who now or in the future acquires a
security interest in the Mortgaged Property and who has actual or constructive notice of
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this Security Instrument waives any and all right to require the marshalling of assets or
to require that any of the Mortgaged Property be sold in the inverse order of alienation
or that any of the Mortgaged Property be sold in parcels or as an entirety in connection
with the exercise of any of the remedies permitted by applicable law or provided in this
Security Instrument.
28.
FURTHER ASSURANCES. Borrower shall execute, acknowledge, and
deliver, at its sole cost and expense, all further acts, deeds, conveyances, assignments,
estoppel certificates, financing statements, transfers and assurances as Lender may
require from time to time in order to better assure, grant, and convey to Lender the
rights intended to be granted, now or in the future, to Lender under this Security
Instrument and the Note.
29.
ESTOPPEL CERTIFICATE. Within ten (10) days after a request from
Lender, Borrower shall deliver to Lender a written statement, signed and acknowledged
by Borrower, certifying to Lender or any person designated by Lender, as of the date of
such statement, (a) that the Note, the Regulatory Agreement (so long as the Loan is
insured or held by HUD), and this Security Instrument are unmodified and in full force
and effect (or, if there have been modifications, that the Note, the Regulatory
Agreement (so long as the Loan is insured or held by HUD), and this Security
Instrument are in full force and effect as modified and setting forth such modifications);
(b) the unpaid principal balance of the Note; (c) the date to which interest under the
Note has been paid; (d) that Borrower is not in default in paying the Indebtedness or in
performing or observing any of the covenants or agreements contained in the Note, the
Regulatory Agreement (so long as the Loan is insured or held by HUD), and this
Security Instrument (or, if Borrower is in default, describing such default in reasonable
detail); (e) whether or not there are then existing any setoffs or defenses known to
Borrower against the enforcement of any right or remedy of Lender under the Note, the
Regulatory Agreement (so long as the Loan is insured or held by HUD), and this
Security Instrument; and (f) any additional facts requested by Lender.
30.

GOVERNING LAW; CONSENT TO JURISDICTION AND VENUE.

(a)
This Security Instrument and the Note, if it does not itself expressly
identify the law that is to apply to it, shall be governed by the laws of the jurisdiction in
which the Land is located (“Property Jurisdiction”), except so long as the Loan is
insured or held by HUD, and solely as to rights and remedies of HUD, as such local or
state laws may be preempted by federal law.
(b)
Borrower agrees that any controversy arising under or in relation to the
Note or this Security Instrument shall be litigated exclusively in the Property Jurisdiction
except as, so long as the Loan is insured or held by HUD and solely as to rights and
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remedies of HUD, federal jurisdiction may be appropriate pursuant to any federal
requirements. The state courts, and with respect to HUD’s rights and remedies, federal
courts, and Governmental Authorities in the Property Jurisdiction shall have exclusive
jurisdiction over all controversies which shall arise under or in relation to the Note, any
security for the Indebtedness, or this Security Instrument. Borrower irrevocably
consents to service, jurisdiction, and venue of such courts for any such litigation and
waives any other venue to which it might be entitled by virtue of domicile, habitual
residence or otherwise.
31.

NOTICE.

(a)
All notices, demands and other communications (“Notice”) under or
concerning this Security Instrument shall be in writing. Each Notice shall be addressed
to the intended recipients at their respective addresses set forth in this Security
Instrument, and shall be deemed given on the earliest to occur of (1) the date when the
Notice is received by the addressee; (2) the first Business Day after the Notice is
delivered to a recognized overnight courier service, with arrangements made for
payment of charges for next Business Day delivery; or (3) the third Business Day after
the Notice is deposited in the United States mail with postage prepaid, certified mail,
return receipt requested. As used in this Section 31, the term (“Business Day”) means
any day other than a Saturday or a Sunday, a federal holiday or holiday in the state
where the Project is located or other day on which the federal government or the
government of the state where the Project is located is not open for business. When
not specifically designated as a Business Day, the term “day” shall refer to a calendar
day. Failure of Lender to send Notice to Borrower or its Principal(s) shall not prevent
the exercise of Lender’s rights or remedies under this Security Instrument or under the
Loan Documents.
(b)
Any party to this Security Instrument may change the address to which
Notices intended for it are to be directed by means of Notice given to the other party in
accordance with this Section 31. Each party agrees that it shall not refuse or reject
delivery of any Notice given in accordance with this Section 31, that it shall
acknowledge, in writing, the receipt of any Notice upon request by the other party and
that any Notice rejected or refused by it shall be deemed for purposes of this Section 31
to have been received by the rejecting party on the date so refused or rejected, as
conclusively established by the records of the U.S. Postal Service or the courier service.
(c)
Any Notice under the Note which does not specify how Notice is to be
given shall be given in accordance with this Section 31.

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BORROWER:

PRINCIPAL(S)/RELATED PARTIES: [add any principals or related entities
Borrower requests]

LENDER:

32.
SALE OF NOTE; CHANGE IN SERVICER. The Note or a partial interest
in the Note (together with this Security Instrument) may be sold one or more times
without prior Notice to Borrower. A sale may result in a change of the loan servicer.
There also may be one or more changes of the loan servicer unrelated to a sale of the
Note. If there is a sale or transfer of all or a partial interest in the Note or a change of
the loan servicer, Lender shall be responsible for ensuring that Borrower is given Notice
of the sale, transfer and/or change. Any loan servicer, including any loan servicer
resulting from any changes mentioned above, must be approved by HUD in accordance
with Program Obligations.
33.
SINGLE ASSET BORROWER. Until the Indebtedness is paid in full or
unless otherwise approved in writing by HUD so long as the Loan is insured or held by
HUD, (a) Borrower shall be a single purpose entity and shall maintain the assets of the
Mortgaged Property in segregated accounts and (b) Borrower (1) shall not acquire any
real or personal property other than the Mortgaged Property and personal property
related to the operation and maintenance of the Mortgaged Property, and so long as the
Loan is insured or held by HUD, except pursuant to the Regulatory Agreement and
Program Obligations and (2) shall not own or operate any business other than the
management and operation of the Mortgaged Property, and so long as the Loan is
insured or held by HUD, except pursuant to the Regulatory Agreement and Program
Obligations.
34.
SUCCESSORS AND ASSIGNS BOUND. This Security Instrument shall
bind, and the rights granted by this Security Instrument shall inure to, the respective
successors and assigns of Lender and Borrower.

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35.
JOINT AND SEVERAL LIABILITY. If more than one person or entity
signs this Security Instrument as Borrower, the obligations of such persons and entities
shall be joint and several.
36.

RELATIONSHIP OF PARTIES; NO THIRD-PARTY BENEFICIARY.

(a)
The relationship between Lender and Borrower shall be solely that of
creditor and debtor, respectively, and nothing contained in this Security Instrument shall
create any other relationship between Lender and Borrower. Borrower agrees that it is
not a third-party beneficiary to the Contract of Insurance between HUD and Lender, as
more fully set forth in 24 C.F.R. Part 207, Subpart B.
(b)
No creditor of any party to this Security Instrument and no other person
(the term “person” includes, but is not limited to, any commercial or governmental entity
or institution) shall be a third-party beneficiary of this Security Instrument, the Note, or
so long as the Loan is insured or held by HUD, the Regulatory Agreement. Without
limiting the generality of the preceding sentences, (1) any servicing arrangement
between Lender and any loan servicer for loss sharing or interim advancement of funds
shall constitute a contractual obligation of such loan servicer that is independent of the
obligation of Borrower for the payment of the Indebtedness, (2) Borrower shall not be a
third-party beneficiary of any servicing arrangement, and (3) no payment by the loan
servicer under any servicing arrangement shall reduce the amount of the Indebtedness.
37.
SEVERABILITY; AMENDMENTS. The invalidity or unenforceability of
any provision of this Security Instrument shall not affect the validity or enforceability of
any other provision, and all other provisions shall remain in full force and effect. This
Security Instrument contains the entire agreement among the parties as to the rights
granted and the obligations assumed in this Security Instrument. This Security
Instrument may not be amended or modified except by a writing signed by the party
against whom enforcement is sought.
38.
RULES OF CONSTRUCTION. The captions and headings of the
Sections of this Security Instrument are for convenience only and shall be disregarded
in construing this Security Instrument. Any reference in this Security Instrument to an
“Exhibit” or a “Section” shall, unless otherwise explicitly provided, be construed as
referring, respectively, to an Exhibit attached to this Security Instrument or to a
Section of this Security Instrument. All Exhibits attached to or referred to in this Security
Instrument are incorporated by reference into this Security Instrument. Use of the
singular in this Security Instrument includes the plural and use of the plural includes the
singular. As used in this Security Instrument, the term “including” means “including,
but not limited to.”

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39.
LOAN SERVICING. All actions regarding the servicing of the Note,
including the collection of payments, the giving and receipt of Notice, inspections of the
Mortgaged Property, inspections of books and records, and the granting of consents
and approvals, may be taken by the HUD-approved loan servicer unless Borrower
receives Notice to the contrary. If Borrower receives conflicting Notices regarding the
identity of the loan servicer or any other subject, any such Notice from Lender shall
govern; provided that so long as the Loan is insured or held by HUD, if Borrower
receives conflicting Notice regarding the identity of the loan servicer or any other
subject, any such Notice from Lender shall govern unless there is a Notice from HUD
and, in all cases, any Notice from HUD governs notwithstanding any Notice from any
other party.
40.
DISCLOSURE OF INFORMATION. To the extent permitted by law,
Lender may furnish information regarding Borrower or the Mortgaged Property to third
parties with an existing or prospective interest in the servicing, enforcement, evaluation,
performance, purchase or securitization of the Indebtedness, including but not limited to
trustees, master servicers, special servicers, rating agencies, and organizations
maintaining databases on the underwriting and performance of multifamily mortgage
loans.
41.
NO CHANGE IN FACTS OR CIRCUMSTANCES. Borrower certifies that
all information in the application for the Loan submitted to Lender (the “Loan
Application”) and in all financial statements, rent rolls, reports, certificates and other
documents submitted in connection with the Loan Application are complete and
accurate in all material respects and that there has been no material adverse change in
any fact or circumstance that would make any such information incomplete or
inaccurate. The submission of false or incomplete information shall be a Covenant
Event of Default.
42.
ESTOPPEL. The Lender is not the agent of HUD. Any action by Lender
in exercising any right or remedy under this Security Instrument shall not be a waiver or
preclude the exercise by HUD of any right or remedy which HUD might have under the
Regulatory Agreement or other Program Obligations.
43.
ACCELERATION; REMEDIES. If a Monetary Event of Default occurs
and is continuing for a period of thirty (30) days, Lender, at Lender's option, may declare
the Indebtedness to be immediately due and payable without further demand, and may
invoke the power of sale and any other remedies permitted by applicable law or
provided in this Security Instrument or in the Note. Following a Covenant Event of
Default, Lender, at Lender's option, but so long as the Loan is insured or held by HUD,
only after receipt of the prior written approval of HUD, may declare the Indebtedness to
be immediately due and payable without further demand, and may invoke the power of
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sale and any other remedies permitted by applicable law or provided in this Security
Instrument or in the Note. Borrower acknowledges that the power of sale granted in this
Security Instrument may be exercised by Lender without prior judicial hearing. Lender
shall be entitled to collect all costs and expenses incurred in pursuing such remedies,
including reasonable attorneys' fees (including but not limited to appellate litigation),
costs of documentary evidence, abstracts and title reports.
[INSERT PROVISIONS PERTAINING TO SALE AS APPROPRIATE UNDER STATE
LAW IF NOT OTHERWISE ADDRESSED BY AN ATTACHED FORM STATE
ADDENDUM]
44.
FEDERAL REMEDIES. In addition to any rights and remedies set forth in
the Regulatory Agreement, HUD has rights and remedies under federal law so long as
HUD is the insurer or holder of the Loan, including but not limited to the right to
foreclose pursuant to the Multifamily Mortgage Foreclosure Act of 1981, 12 U.S.C.
Section 3701, et seq., as amended, when HUD is the holder of the Note.
45.
REMEDIES FOR WASTE. In addition to any other rights and remedies
set forth in the Note and this Security Instrument or those available under applicable
law, including exemplary damages where permitted, the following remedies for Waste
by Borrower are available to Lender as necessary to give complete redress to Lender
for Lender’s loss or damage:
(a)
the exercise of the remedies available to Lender during the existence of a
Covenant Event of Default, as set forth in Section 43 of this Security Instrument;
(b)
an injunction prohibiting future Waste or requiring correction of Waste
already committed, but only to the extent that Waste has impaired or threatens to impair
Lender’s security; and
(c)
recovery of damages, limited by the amount of Waste, to the extent that
Waste has impaired Lender’s security. So long as the Loan is insured or held by HUD,
any recovery of damages by Lender or HUD for Waste shall be applied, at the sole
discretion of HUD, (1) to fees, costs and expenses (including reasonable attorneys’
fees) incurred by Lender; (2) to remedy Waste of the Mortgaged Property, (3) to the
Indebtedness or (4) for any other purpose designated by HUD.
46.
TERMINATION OF HUD RIGHTS AND REFERENCES. At such time as
HUD no longer insures or holds the Note, (a) all rights and responsibilities of HUD shall
conclude, all mortgage insurance and references to mortgage insurance premiums, all
references to HUD, GNMA and Program Obligations and related terms and provisions
shall cease, and all rights and obligations of HUD shall terminate; (b) all obligations and
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responsibilities of Borrower to HUD shall likewise terminate; and (c) all obligations and
responsibilities of Lender to HUD shall likewise terminate; provided, however, nothing
contained in this Section 46, shall in any fashion discharge Borrower from any
obligations to HUD under the Regulatory Agreement or Program Obligations or Lender
from any obligations to HUD under Program Obligations, which occurred prior to
termination of the Contract of Insurance. The provisions of this Section 46 shall be
given effect automatically upon the termination of the Contract of Insurance or the
transfer of this Security Instrument by HUD to another party, provided that upon the
request of Borrower, Lender or the party to whom the Security Instrument has been
transferred, at no cost to HUD, HUD shall execute such documents as may be
reasonably requested to confirm the provisions of this Section 46.
47.
CONSTRUCTION FINANCING [IF APPLICABLE]. The Indebtedness
represents funds to be used in the construction of certain Improvements on the Land, in
accordance with the Building Loan Agreement which is incorporated herein by reference
to the same extent and effect as if fully set forth and made herein (provided, however,
that if and to the extent that the Building Loan Agreement is inconsistent herewith, this
Security Instrument shall govern). If the construction of the Improvements to be made
pursuant to the Building Loan Agreement are not made in accordance with the terms of
said Building Loan Agreement, or Borrower otherwise defaults under the Building Loan
Agreement, Lender, after due Notice to Borrower, or any subsequent owner, is hereby
vested with full and complete authority to enter upon the Land to employ watchmen to
protect such Improvements from depredation or injury and to preserve and protect the
Personalty therein, to continue any and all outstanding contracts for the erection and
completion of said Improvements, to make and enter into any contracts and obligations
wherever necessary, either in its own name or in the name of Borrower, or other owner,
and to pay and discharge all debts, obligations, and liabilities incurred thereby. All such
sums so advanced by Lender (exclusive of advances of the principal of the
Indebtedness) shall be added to the principal of the Indebtedness secured hereby and
all shall be secured by this Security Instrument and shall be due and payable on
demand with interest at the rate provided in the Note, but no such advances shall be
insured unless same are specifically approved by HUD prior to the making thereof. The
Indebtedness shall, at the option of Lender or holder of this Security Instrument and the
Note, become due and payable on the failure of Borrower, or other owner, to keep and
perform any of the covenants, conditions and agreements of the Building Loan
Agreement. This covenant shall be terminated upon the completion of the
Improvements to the satisfaction of Lender and the making of the final advance as
provided in the Building Loan Agreement.
48.

ENVIRONMENTAL HAZARDS.

(a)

Definitions:

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(1)

“Hazardous Materials” means petroleum and petroleum products
and compounds containing them, including gasoline, diesel fuel and
oil; explosives; flammable materials; radioactive materials;
polychlorinated biphenyls (“PCBs”) and compounds containing
them; lead and lead-based paint; asbestos or asbestos-containing
materials in any form that is or could become friable; underground
or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Mortgaged
Property is prohibited by any Governmental Authority; any
substance that requires special handling; and any other material or
substance now or in the future defined as a “hazardous substance,”
“hazardous material,” “hazardous waste,” “toxic substance,” “toxic
pollutant,” “contaminant,” or "pollutant" within the meaning of any
Hazardous Materials Law.

(2)

“Hazardous Materials Laws” means all federal, state, and local
laws, ordinances and regulations and standards, rules, policies and
other governmental requirements, administrative rulings and court
judgments and decrees in effect now or in the future and including
all amendments that relate to Hazardous Materials and apply to
Borrower or to the Mortgaged Property. Hazardous Materials Laws
include, but are not limited to, the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.
Section 9601, et seq., the Resource Conservation and Recovery
Act, 42 U.S.C. Section 6901, et seq., the Toxic Substance Control
Act, 15 U.S.C. Section 2601, et seq., the Clean Water Act,
33 U.S.C. Section 1251, et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C. Section 5101, et seq., and their state
analogs.

(3)

“Environmental Permit” means any permit, license, or other
authorization issued under any Hazardous Materials Law with
respect to any activities or businesses conducted on or in relation
to the Mortgaged Property.

(b)
Except for (1) matters covered by a written program of operations and
maintenance approved in writing by Lender (“O&M Program”); (2) matters described in
subsection (c) of this Section 48; or (3) (for so long as the Loan is insured or held by
HUD) matters covered by Program Obligations that may differ from this Section 48 (with
respect to lead based paint requirements, for example), Borrower shall not cause or
permit any of the following:
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(i)

any occurrence or condition on the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property, which occurrence or condition is or may be in violation of
Hazardous Materials Laws; or

(ii)

any violation of or noncompliance with the terms of any
Environmental Permit with respect to the Mortgaged Property or
any property of Borrower that is adjacent to the Mortgaged
Property.

The matters described in clauses (i) and (ii) above are referred to collectively in this
Section 48 as “Prohibited Activities or Conditions.”
(c)
Prohibited Activities and Conditions shall not include the safe and lawful
use and storage of quantities of (1) supplies, cleaning materials and petroleum products
customarily used in the operation and maintenance of comparable multifamily
properties; (2) cleaning materials, personal grooming items and other items sold in
containers for consumer use and used by tenants and occupants of residential dwelling
units in the Mortgaged Property; and (3) petroleum products used in the operation and
maintenance of motor vehicles and motor-operated equipment from time to time located
on the Mortgaged Property’s parking areas, so long as all of the foregoing are used,
stored, handled, transported and disposed of in compliance with Hazardous Materials
Laws.
(d)
Borrower shall take all commercially reasonable actions (including the
inclusion of appropriate provisions in any Leases executed after the date of this Security
Instrument) to prevent its employees, agents, and contractors, and all tenants and other
occupants from causing or permitting any Prohibited Activities or Conditions. Borrower
shall not lease or allow the sublease or use of all or any portion of the Mortgaged
Property to any tenant or subtenant for nonresidential use by any user that, in the
ordinary course of its business, would cause or permit any Prohibited Activity or
Condition.
(e)
If an O&M Program has been established with respect to Hazardous
Materials, Borrower shall comply in a timely manner with, and cause all employees,
agents, and contractors of Borrower and any other persons encompassed by the O&M
Program and present on the Mortgaged Property to comply with the O&M Program. All
costs of performance of Borrower's obligations under any O&M Program shall be paid
by Borrower, and Lender's out-of-pocket costs incurred in connection with the
monitoring and review of the O&M Program and Borrower's performance shall be paid
by Borrower upon demand by Lender. Any such out-of-pocket costs of Lender which
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Borrower fails to pay promptly shall become an additional part of the Indebtedness as
provided in Section 13; provided that so long as the Loan is insured by HUD, no
advances made by Lender under this subsection (e) shall become an additional part of
the Indebtedness unless such advances receive the prior written approval of HUD and
provided further that unless approved by HUD, Lender shall have no obligation to make
any such advances.
(f)
Borrower represents and warrants to Lender that, except as previously
disclosed by Borrower to Lender in writing:
(1)

Borrower has not at any time engaged in, caused or permitted any
Prohibited Activities or Conditions;

(2)

to the best of Borrower's knowledge after reasonable and diligent
inquiry, no Prohibited Activities or Conditions exist or have existed;

(3)

the Mortgaged Property does not now contain any underground
storage tanks, and, to the best of Borrower’s knowledge after
reasonable and diligent inquiry, the Mortgaged Property has not
contained any underground storage tanks in the past. If there is an
underground storage tank located on the Mortgaged Property that
has been previously disclosed by Borrower to Lender in writing, that
tank complies with all requirements of Hazardous Materials Laws;

(4)

Borrower has complied with all Hazardous Materials Laws,
including all requirements for notification regarding releases of
Hazardous Materials. Without limiting the generality of the
foregoing, Borrower has obtained all Environmental Permits
required for the operation of the Mortgaged Property in accordance
with Hazardous Materials Laws now in effect and all such
Environmental Permits are in full force and effect;

(5)

no event has occurred with respect to the Mortgaged Property that
constitutes, or with the passing of time or the giving of Notice would
constitute, noncompliance with the terms of any Environmental
Permit;

(6)

to the best of Borrower’s knowledge after reasonable and diligent
inquiry, there are no actions, suits, claims or proceedings, pending
or threatened, that involve the Mortgaged Property and allege, arise
out of, or relate to any Prohibited Activity or Condition; and

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(7)

Borrower has not received any complaint, order, notice of violation
or other communication from any Governmental Authority with
regard to air emissions, water discharges, noise emissions or
Hazardous Materials, or any other environmental, health or safety
matters affecting the Mortgaged Property or any other property of
Borrower that is adjacent to the Mortgaged Property that have not
previously been resolved legally.

The representations and warranties in this Section 48 shall be continuing
representations and warranties that shall be deemed to be made by Borrower
throughout the term of the Loan, until the Indebtedness has been paid in full.
(g)
Borrower shall promptly notify Lender in writing upon the occurrence of
any of the following events:
(1)

Borrower's discovery of any Prohibited Activity or Condition;

(2)

Borrower’s receipt of or knowledge of any complaint, order, notice
of violation or other communication from any Governmental
Authority or other person with regard to present or future alleged
Prohibited Activities or Conditions or any other environmental,
health or safety matters affecting the Mortgaged Property or any
other property of Borrower that is adjacent to the Mortgaged
Property; and

(3)

any representation or warranty in this Section 48 becoming untrue
after the date of this Security Instrument.

Any such Notice given by Borrower shall not relieve Borrower of, or result in a waiver of,
any obligation under this Security Instrument, the Note, or any other Loan Document.
(h)
Borrower shall pay promptly the costs of any environmental inspections,
tests or audits (“Environmental Inspections”) required by Lender in connection with
any foreclosure or deed in lieu of foreclosure, or as a condition of Lender’s consent to
any transfer under Section 21, or required by Lender following a reasonable
determination by Lender that Prohibited Activities or Conditions may exist. Any such
costs incurred by Lender (including the fees and out-of-pocket costs of attorneys and
technical consultants whether incurred in connection with any judicial (appellate or
otherwise) or administrative process or otherwise) which Borrower fails to pay promptly
shall become an additional part of the Indebtedness as provided in Section 13; provided
that so long as the Loan is insured by HUD, no advances made by Lender under this
subsection (h) shall become an additional part of the Indebtedness unless such
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advances receive the prior written approval of HUD and provided further that unless
approved by HUD, Lender shall have no obligation to make such further advances. The
results of all Environmental Inspections made by Lender shall at all times remain the
property of Lender and Lender shall have no obligation to disclose or otherwise make
available to any party other than Borrower, and so long as the Loan is insured by HUD,
to HUD, such results or any other information obtained by Lender in connection with its
Environmental Inspections. Lender hereby reserves the right, and Borrower hereby
expressly authorizes Lender, to make available to any party, including any prospective
bidder at a foreclosure sale of the Mortgaged Property, the results of any Environmental
Inspections made by Lender with respect to the Mortgaged Property. Borrower
consents to Lender notifying any party (either as part of a notice of sale or otherwise) of
the results of any of Lender's Environmental Inspections. Borrower acknowledges that
Lender cannot control or otherwise assure the truthfulness or accuracy of the results of
any of its Environmental Inspections and that the release of such results to prospective
bidders at a foreclosure sale of the Mortgaged Property may have a material and
adverse effect upon the amount which a party may bid at such sale. Borrower agrees
that Lender shall have no liability whatsoever as a result of delivering the results of any
of its Environmental Inspections to any third party, and Borrower hereby releases and
forever discharges Lender from any and all claims, damages, or causes of action,
arising out of, connected with or incidental to the results of, the delivery of any of
Lender's Environmental Inspections.
(i)
If any investigation, site monitoring, containment, clean-up, restoration or
other remedial work (“Remedial Work”) is necessary to comply with any Hazardous
Materials Law applicable to the Mortgaged Property or to its use, operation or
improvement, Borrower shall, by the earlier of (1) the applicable deadline required by
the Hazardous Materials Law or (2) thirty (30) days after Notice from Lender demanding
such action, begin performing the Remedial Work, and thereafter diligently prosecute it
to completion, and shall in any event complete the work by the time required by
applicable Hazardous Materials Law. If Borrower fails to begin on a timely basis or
diligently prosecute any required Remedial Work, Lender may, at its option, cause the
Remedial Work to be completed, in which case Borrower shall reimburse Lender on
demand for the cost of doing so. So long as the Loan is insured by HUD, no advances
made by Lender under this subsection (i) shall become part of the Indebtedness as
provided in Section 13 unless such advances receive the prior written approval of HUD
and provided further that unless approved by HUD, Lender shall have no obligation to
make any such advances.
(j)
Borrower shall cooperate with any inquiry by any Governmental Authority
and shall comply with any governmental or judicial order which arises from any alleged
Prohibited Activity or Condition.

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(k)
Borrower shall indemnify [if Borrower is located in a State that requires an
indemnification agreement separate and apart from this Security Instrument, Borrower
shall provide said indemnification agreement to Lender], hold harmless and defend (1)
Lender, (2) any prior owner or holder of the Note, (3) the loan servicer, (4) any prior loan
servicer, (5) the officers, directors, shareholders, partners, employees and trustees of
any of the foregoing, and (6) the heirs, legal representatives, successors and assigns of
each of the foregoing (collectively, “Indemnitees”) from and against all proceedings,
claims, damages, penalties and costs (whether initiated or sought by Governmental
Authorities or private parties), including fees and out of pocket expenses of attorneys
and expert witnesses, investigatory fees, and remediation costs, whether incurred in
connection with any judicial (including appellate) or administrative process or otherwise,
arising directly or indirectly from any of the following except where the Mortgaged
Property became contaminated subsequent to any transfer of ownership which was
approved in writing by Lender (and so long as the Loan is insured or held by HUD, by
HUD), provided such transferee assumes in writing all obligations of Borrower with
respect to Prohibited Activities or Conditions:
(i)

any breach of any representation or warranty of Borrower in this
Section 48;

(ii)

any failure by Borrower to perform or comply with any of its
obligations under this Section 48;

(iii)

the existence or alleged existence of any Prohibited Activity or
Condition;

(iv)

the actual or alleged violation of any Hazardous Materials Law.

(l)
Counsel selected by Borrower to defend Indemnitees shall be subject to
the approval of those Indemnitees. However, any Indemnitee may elect to defend any
claim or legal or administrative proceeding at Borrower’s expense.
(m) Borrower shall not, without the prior written consent of those Indemnitees
who are named as parties to a claim or legal or administrative proceeding (“Claim”),
settle or compromise the Claim if the settlement (1) results in the entry of any judgment
that does not include as an unconditional term the delivery by the claimant or plaintiff to
Lender of a written release of those Indemnitees, satisfactory in form and substance to
Lender; or (2) may materially and adversely affect Lender, as determined by Lender in
its discretion.

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(n)
Borrower’s obligation to indemnify the Indemnitees shall not be limited or
impaired by any of the following, or by any failure of Borrower or any guarantor to
receive Notice of or consideration for any of the following:

(o)

(1)

any amendment or modification of any Loan Document;

(2)

any extensions of time for performance required by any Loan
Document;

(3)

the accuracy or inaccuracy of any representations and warranties
made by Borrower under this Security Instrument or any other Loan
Document;

(4)

the release of Borrower or any other person, by Lender or by
operation of law, from performance of any obligation under any
Loan Document;

(5)

the release or substitution in whole or in part of any security for the
Indebtedness; and

(6)

Lender’s failure to properly perfect any lien or security interest
given as security for the Indebtedness.

Borrower shall, at its own cost and expense, do all of the following:
(1)

pay or satisfy any judgment or decree that may be entered against
any Indemnitee or Indemnitees in any legal or administrative
proceeding incident to any matters against which Indemnitees are
entitled to be indemnified under this Section 48;

(2)

reimburse Indemnitees for any expenses paid or incurred in
connection with any matters against which Indemnitees are entitled
to be indemnified under this Section 48; and

(3)

reimburse Indemnitees for any and all expenses, including fees and
out-of-pocket expenses of attorneys and expert witnesses, paid or
incurred in connection with the enforcement by Indemnitees of their
rights under this Section 48, or in monitoring and participating in
any legal (including appellate) or administrative proceeding.

(p)
In any circumstances in which the indemnity under this Section 48 applies,
Lender may employ its own legal counsel and consultants to prosecute, defend or
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negotiate any claim or legal or administrative proceeding and Lender, with the prior
written consent of Borrower (which shall not be unreasonably withheld, delayed or
conditioned), may settle or compromise any action or legal or administrative proceeding.
Borrower shall reimburse Lender upon demand for all costs and expenses incurred by
Lender, including all costs of settlements entered into in good faith, and the fees and out
of pocket expenses of such attorneys (including but not limited to appellate litigation)
and consultants.
(q)
The provisions of this Section 48 shall be in addition to any and all other
obligations and liabilities that Borrower may have under applicable law or under other
Loan Documents, and each Indemnitee shall be entitled to indemnification under this
Section 48 without regard to whether Lender or that Indemnitee has exercised any
rights against the Mortgaged Property or any other security, pursued any rights against
any guarantor, or pursued any other rights available under the Loan Documents or
applicable law. If Borrower consists of more than one entity, the obligation of those
entities to indemnify the Indemnitees under this Section 48 shall be joint and several.
The obligation of Borrower to indemnify the Indemnitees under this Section 48 shall
survive any repayment or discharge of the Indebtedness, any foreclosure proceeding,
any foreclosure sale, any delivery of any deed in lieu of foreclosure, and any release of
record of the lien of this Security Instrument. Notwithstanding anything in Section 48 to
the contrary, so long as the Loan is insured or held by HUD, indemnification costs and
reimbursements to Lender or to any or all Indemnitees shall be paid only from the
available proceeds of an appropriate insurance policy or from Surplus Cash or other
escrow accounts.
(r)
So long as the Loan is insured or held by HUD, all references to Lender in
this Section 48 shall also be construed to refer to HUD as its interest appears (solely as
determined by HUD) and all notifications to Lender must also be made to HUD and all
Lender approvals and exercises of discretion by Lender under this Section 48 must first
have the prior written approval of HUD, provided, that, so long as the Loan is insured or
held by HUD, the reference to Lender as an Indemnitee shall be construed to refer to
HUD, and Borrower’s obligations to indemnify HUD as an Indemnitee shall remain in
effect in accordance with this Section 48, notwithstanding the termination or expiration
of insurance of the Loan by HUD.
(s)
To the extent any HUD environmental requirements or standards are
inconsistent or conflict with the provisions of this Section 48, the HUD requirements or
standards shall control so long as the Loan is insured or held by HUD.
49.
[Add state requirements for future advances, credit line or open-end
mortgages if not otherwise addressed by an attached form state Addendum]

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ATTACHED EXHIBITS. The following Exhibits are attached to this Security
Instrument:
|X|

Exhibit A

Description of the Land (required).

| |

Exhibit B

Modifications to Security Instrument

IN WITNESS WHEREOF, Borrower has signed and delivered this Security Instrument
or has caused this Security Instrument to be signed and delivered by its duly authorized
representative, as a sealed instrument.

[SIGNATURES AND ACKNOWLEDGMENTS]

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EXHIBIT A
[DESCRIPTION OF THE LAND]

A-1

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EXHIBIT B
MODIFICATIONS TO SECURITY INSTRUMENT

The following modifications are made to the text of the Security Instrument of which this
Exhibit is a part: [INCLUDE ANY APPROVED MODIFICATIONS TO THE SECURITY
INSTRUMENT. IF A FORM STATE ADDENDUM IS OTHERWISE VALIDLY
ATTACHED TO AND INCORPORATED IN THIS SECURITY INSTRUMENT
PURSUANT TO APPLICABLE STATE LAW, THE PROVISIONS OF SUCH
ADDENDUM NEED NOT BE INCLUDED SEPERATELY UNDER THIS EXHIBIT B.]

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B-1

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