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If the Security is acquired by the Agency, all right, title and interest of Borrower in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the Agency to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender. 8. OCCLlpancy of Property, Borrower's Loag_Application, Borrower shall occupy, establish, and maintain the use ofthe Property as Borrower's principal residence within sixty (60) days after the execution of this Security Instrument. Borrower's principal residence shall mean the Property is occupied by the Borrower for at least ten (10) months out of each year. The Borrower shall not lease the Property for more than two (2) months without the written consent of the Agency during any twelve (12) month period and shall not lease the Property without providing the Agency with a copy of the lease. Borrower shall be in default if any forfeiture action or proceeding, whether civil or criminal, is begun that in Lender's good faith judgment could result in forfeiture of the Property or otherwise materially impair the lien created by this Deed of Trust or Agency's security interest. Borrower may cure such a default and reinstate, as provided in paragraph 19, by causing the action or proceeding to be dismissed with a ruling that, in Agency's good faith determination, precludes forfeiture of the Borrower's interest in the Property or other material impairment of the lien created by this Deed of Trust or Agency's security interest. Borrower shall also be in default if Borrower, during the loan application process, gave materially false or inaccurate information or statements to Agency (or failed to provide Agency with any material information) in connection with the loan evidenced by the Note, including, but not limited to, representations concerning (i) Borrower's occupancy of the Property as a principal residence and (ii) Borrower's income. 9. Protection of the Army's Security. If Borrower fails to perform the covenants and agreements contained in this Deed of Trust or if any action or proceeding is commenced which materially affects the Agency's interest in the Security, including, but not limited to, default under the Deed of Trust securing the First Lender Note, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the Agency, atthe Agency's option, upon notice to Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect the Agency's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs. Any amounts disbursed by the Agency pursuant to this paragraph, with interest thereon, will become an indebtedness of Borrower secured by this Deed of Trust. Unless Borrower and Agency agree to other terms of payment, such amount will be payable upon notice from the Agency to Borrower requesting payment thereof, and will bear interest from the date of disbursement at the rate payable from time to time on outstanding principal under the Note unless payment of interest at such rate would be contrary to applicable law, in which event such amounts will bear interest at the highest rate permissible under applicable law. Nothing contained in this paragraph will require the Agency to insure any expense or take any action hereunder. 10. Inspection. The Agency may make or cause to be made reasonable entries upon and inspections of the Security; provided that the Agency will give Borrower reasonable notice of inspection. 11. Application of Payments. ]ents. Unless applicable law provides otherwise, any payments received by the Agency under the Note shall be applied by the Agency first to interest, if any, and then to the principal due on the Note. 12. Condemnation. (A) The proceeds of any award or claim for damages, director consequential, in connection with any condemnation, exercise or eminent domain, or other taking of the Property, or part thereof, or for conveyance Redwood City First Time Homebuyer Silent Loan Program Deed of Trust April 23, 2000 11111111111IIII 3�;e'�.�e'm'.'