Hazard Insurance Requirement and Flood Insurance

At the Closing Date, the property securing each Mortgage Loan must be covered by hazard insurance including fire and extended coverage insurance, meeting the standards accepted by prudent practice and custom in the geographic area in which the property is located. The Seller may, but is not required, to collect Escrow Payments for hazard insurance premiums. Each Mortgage Loan shall provide that in the event of any loss settlement on a hazard insurance policy the mortgagee shall have the option of applying the losssettlement proceeds against the principal amount of the Mortgage Loan (See 761 CMR 22.06). Sellers are responsible for compliance with the provisions of the Flood Disaster ProtectionAct of 1973 whenever such provisions would be applicable to a Mortgage Loaninwhicha Loan Participation is sold to MHMFA.